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Budget-balance, fairness and minimal manipulability

  • Ehlers, Lars

    ()

    (Departement de Sciences Economiques and CIREQ, Universite de Montreal)

  • Svensson, Lars-Gunnar

    ()

    (Department of Economics, Lund University)

  • Andersson, Tommy

    ()

    (Department of Economics, Lund University)

A common real-life problem is to fairly allocate a number of indivisible objects and a fixed amount of money among a group of agents. Fairness requires that each agent weakly prefers his consumption bundle to any other agent's bundle. In this context, fairness is incompatible with budget-balance and non-manipulability (Green and Laffont, 1979). Our approach here is to weaken or abandon non-manipulability. We search for the rules which are minimally manipulable among all fair and budget-balanced rules. First, we show for a given preference profile, all fair and budget-balanced rules are either (all) manipulable or (all) non-manipulable. Hence, measures based on counting profiles where a rule is manipulable or considering a possible inclusion of profiles where rules are manipulable do not distinguish fair and budget-balanced rules. Thus, a ``finer'' measure is needed. Our new concept compares two rules with respect to their degree of manipulability by counting for each profile the number of agents who can manipulate the rule. Second, we show that maximally preferred fair allocation rules are the minimally (individually and coalitionally) manipulable fair and budget-balanced allocation rules according to our new concept. Such rules choose allocations with the maximal number of agents for whom the utility is maximized among all fair and budget-balanced allocations.

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Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 9 (2014)
Issue (Month): 3 (September)
Pages:

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Handle: RePEc:the:publsh:1346
Contact details of provider: Web page: http://econtheory.org

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  1. Svensson, Lars-Gunnar, 1983. "Large Indivisibles: An Analysis with Respect to Price Equilibrium and Fairness," Econometrica, Econometric Society, vol. 51(4), pages 939-54, July.
  2. Tommy Andersson & Lars Ehlers & Lars-Gunnar Svensson, 2012. "(Minimally) ?-Incentive Compatible Competitive Equilibria in Economies with Indivisibilities," Cahiers de recherche 04-2012, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. Andersson, Tommy & Svensson, Lars-Gunnar & Ehlers, Lars, 2010. "Budget-Balance, Fairness and Minimal Manipulability," Working Papers 2010:16, Lund University, Department of Economics, revised 15 Jan 2013.
  4. Mishra, Debasis & Parkes, David C., 2009. "Multi-item Vickrey-Dutch auctions," Games and Economic Behavior, Elsevier, vol. 66(1), pages 326-347, May.
  5. Ning Sun & Zaifu Yang, 2003. "A General Strategy Proof Fair Allocation Mechanism," Working Papers 346, Bielefeld University, Center for Mathematical Economics.
  6. Svensson, Lars-Gunnar, 2006. "Coalition Strategy-Proofness and Fairness," Working Papers 2006:10, Lund University, Department of Economics.
  7. Azacis, Helmuts, 2005. "Double Implementation in a Market for Indivisible Goods with a Price Constraint," Cardiff Economics Working Papers E2005/10, Cardiff University, Cardiff Business School, Economics Section.
  8. Atila Abdulkadiroğlu & Tayfun Sönmez & M. Utku Ünver, 2004. "Room assignment-rent division: A market approach," Social Choice and Welfare, Springer, vol. 22(3), pages 515-538, 06.
  9. Claus-Jochen Haake & Matthias G. Raith & Francis Edward Su, 2002. "Bidding for envy-freeness: A procedural approach to n-player fair-division problems," Social Choice and Welfare, Springer, vol. 19(4), pages 723-749.
  10. Parag A. Pathak & Tayfun Sönmez, 2011. "School Admissions Reform in Chicago and England: Comparing Mechanisms by their Vulnerability to Manipulation," Boston College Working Papers in Economics 784, Boston College Department of Economics.
  11. Alkan, Ahmet & Demange, Gabrielle & Gale, David, 1991. "Fair Allocation of Indivisible Goods and Criteria of Justice," Econometrica, Econometric Society, vol. 59(4), pages 1023-39, July.
  12. Andersson, T. & Svensson, L.-G. & Yang, Z., 2010. "Constrainedly fair job assignments under minimum wages," Games and Economic Behavior, Elsevier, vol. 68(2), pages 428-442, March.
  13. Maus,Stefan & Peters,Hans & Storcken,Ton, 2004. "Minimal Manipulability: Anonymity and Unanimity," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  14. Flip Klijn, 2000. "An algorithm for envy-free allocations in an economy with indivisible objects and money," Social Choice and Welfare, Springer, vol. 17(2), pages 201-215.
  15. Svensson, Lars-Gunnar, 1991. "Nash Implementation of Competitive Equilibria in a Model with Indivisible Goods," Econometrica, Econometric Society, vol. 59(3), pages 869-77, May.
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  18. Ma Jinpeng, 1995. "Stable Matchings and Rematching-Proof Equilibria in a Two-Sided Matching Market," Journal of Economic Theory, Elsevier, vol. 66(2), pages 352-369, August.
  19. Maus, Stefan & Peters, Hans & Storcken, Ton, 2007. "Anonymous voting and minimal manipulability," Journal of Economic Theory, Elsevier, vol. 135(1), pages 533-544, July.
  20. Andersson, Tommy & Svensson, Lars-Gunnar, 2008. "Non-manipulable assignment of individuals to positions revisited," Mathematical Social Sciences, Elsevier, vol. 56(3), pages 350-354, November.
  21. Sun, Ning & Yang, Zaifu, 2003. "A general strategy proof fair allocation mechanism," Economics Letters, Elsevier, vol. 81(1), pages 73-79, October.
  22. Mishra, D. & Talman, A.J.J., 2010. "Characterization of the Walrasian equilibria of the assignment model," Other publications TiSEM 3e249b02-c0f4-4ccf-bd37-f, School of Economics and Management.
  23. Carmen Beviá, 2010. "Manipulation games in economies with indivisible goods," International Journal of Game Theory, Springer, vol. 39(1), pages 209-222, March.
  24. Velez, Rodrigo A., 2011. "Are incentives against economic justice?," Journal of Economic Theory, Elsevier, vol. 146(1), pages 326-345, January.
  25. H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
  26. Tadenuma, Koichi & Thomson, William, 1993. "The fair allocation of an indivisible good when monetary compensations are possible," Mathematical Social Sciences, Elsevier, vol. 25(2), pages 117-132, February.
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