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On the merit principle in strategic exchange

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  • Peng Liu
  • Huaxia Zeng

Abstract

New fairness notions in align with the merit principle are proposed for designing exchange rules. We show that, for an obviously strategy-proof, efficient and individually rational rule, an upper bound of fairness attainable is that, if two agents possess objects considered the best by all others divided into two equal groups, then at least one receives her favorite object. Notably, it is not possible to guarantee them both having favorites. Our results thus indicate an unambiguous trade-off between incentives and fairness in the design of exchange rules.

Suggested Citation

  • Peng Liu & Huaxia Zeng, 2025. "On the merit principle in strategic exchange," Papers 2504.05678, arXiv.org, revised Jun 2025.
    • Handle: RePEc:arx:papers:2504.05678
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    4. Andreas Siemoneit, 2023. "Merit first, need and equality second: hierarchies of justice," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 70(4), pages 537-567, December.
    5. Mackenzie, Andrew, 2020. "A revelation principle for obviously strategy-proof implementation," Games and Economic Behavior, Elsevier, vol. 124(C), pages 512-533.
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