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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)

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Handle: RePEc:the:publsh:1346
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  1. Maus,Stefan & Peters,Hans & Storcken,Ton, 2005. "Anonymous voting and minimal manipulability," Research Memorandum 009, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  2. Stefan Maus & Hans Peters & Ton Storcken, 2007. "Minimal manipulability: anonymity and unanimity," Social Choice and Welfare, Springer, vol. 29(2), pages 247-269, September.
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  5. Andersson, Tommy & Svensson, Lars-Gunnar, 2006. "Non-manipulable Assignment of Individuals to Positions Revisited," Working Papers 2006:11, Lund University, Department of Economics, revised 12 Apr 2007.
  6. 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.
  7. 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.
  8. 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.
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