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Manipulation via Endowments in Exchange Markets with Indivisible Goods

We consider exchange markets with heterogeneous indivisible goods. We are interested in exchange rules that are efficient and immune to manipulations via endowments (either with respect to hiding or destroying part of the endowment or transferring part of the endowment to another trader). We consider three manipulability axioms: hiding-proofness, destruction-proofness, and transfer-proofness. We prove that no rule satisfying efficiency and hiding-proofness (which implies individual rationality) exists. For two-agent exchange markets with separable and responsive preferences, we show that efficient, individually rational, and destruction-proof rules exist. However, for separable preferences, no rule satisfies efficiency, individual rationality, and destruction-proofness. In the case of transfer-proofness the compatibility with efficiency and individual rationality for the two-agent case extends to the unrestricted domain. For exchange markets with separable preferences and more than two agents no rule satisfies efficiency, individual rationality, and transfer-proofness.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 598.04.

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Length: 16
Date of creation: 01 Dec 2003
Date of revision:
Handle: RePEc:aub:autbar:598.04
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  1. Fiestras-Janeiro, Gloria & Klijn, Flip & Sanchez, Estela, 2004. "Manipulation of optimal matchings via predonation of endowment," Mathematical Social Sciences, Elsevier, vol. 47(3), pages 295-312, May.
  2. Tayfun Sonmez, 1999. "Strategy-Proofness and Essentially Single-Valued Cores," Econometrica, Econometric Society, vol. 67(3), pages 677-690, May.
  3. Sertel, Murat R. & Ozkal-Sanver, Ipek, 2002. "Manipulability of the men- (women-) optimal matching rule via endowments," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 65-83, September.
  4. Klaus B. & Peters H. & Storcken T., 1995. "Reallocation of an infinetely divisible good," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. Bettina Klaus & Hans Peters & Ton Storcken, 1998. "Strategy-proof division with single-peaked preferences and individual endowments," Social Choice and Welfare, Springer, vol. 15(2), pages 297-311.
  6. Postlewaite, Andrew, 1979. "Manipulation via Endowments," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 255-62, April.
  7. Barbera, S. & Sonnenschein, H., 1988. "Voting By Quota And Committee," UFAE and IAE Working Papers 95-88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  8. Salvador Barbera & Hugo Sonnenschein & Lin Zhou, 1990. "Voting by Committees," Cowles Foundation Discussion Papers 941, Cowles Foundation for Research in Economics, Yale University.
  9. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
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