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Budget-Balance, Fairness and Minimal Manipulability

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 budgetbalanced rules. First, we show for a given preference profile, all fair and budgetbalanced 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 budgetbalanced 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 linked fair allocation rules are the minimally (individually and coalitionally) manipulable fair and budget-balanced allocation rules according to our new concept. Such rules link any agent to the bundle of a pre-selected agent through a sequence of indifferences.

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Paper provided by Lund University, Department of Economics in its series Working Papers with number 2010:16.

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Length: 25 pages
Date of creation: 26 Nov 2010
Date of revision: 15 Jan 2013
Publication status: Forthcoming as Andersson, Tommy, Lars-Gunnar Svensson and Lars Ehlers, 'Budget-Balance, Fairness and Minimal Manipulability' in Theoretical Economics, 2014.
Handle: RePEc:hhs:lunewp:2010_016
Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
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  1. 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.
  2. Velez, Rodrigo A., 2011. "Are incentives against economic justice?," Journal of Economic Theory, Elsevier, vol. 146(1), pages 326-345, January.
  3. Ning Sun & Zaifu Yang, 2003. "A General Strategy Proof Fair Allocation Mechanism," Center for Mathematical Economics Working Papers 346, Center for Mathematical Economics, Bielefeld University.
  4. Parag A. Pathak & Tayfun Sönmez, 2011. "School Admissions Reform in Chicago and England: Comparing Mechanisms by Their Vulnerability to Manipulation," NBER Working Papers 16783, National Bureau of Economic Research, Inc.
  5. 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.
  6. ANDERSSON, Tommy & EHLERS, Lars & SVENSSON, Lars-Gunnar, 2010. "Budget-Balance, Fairness and Minimal Manipulability," Cahiers de recherche 18-2010, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  7. Lars-Gunnar Svensson, 2009. "Coalitional strategy-proofness and fairness," Economic Theory, Springer, vol. 40(2), pages 227-245, August.
  8. 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.
  9. 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.
  10. Atila Abdulkadiroglu & Tayfun Sonmez & M. Utku Unver, 2002. "Room Assignment-Rent Division: A Market Approach," Game Theory and Information 0202003, EconWPA, revised 26 Sep 2002.
  11. Azacis, Helmuts, 2008. "Double implementation in a market for indivisible goods with a price constraint," Games and Economic Behavior, Elsevier, vol. 62(1), pages 140-154, January.
  12. 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.
  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).
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  15. repec:mtl:montec:04-2012 is not listed on IDEAS
  16. Mishra, Debasis & Parkes, David C., 2009. "Multi-item Vickrey-Dutch auctions," Games and Economic Behavior, Elsevier, vol. 66(1), pages 326-347, May.
  17. 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.
  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. Mishra, Debasis & Talman, Dolf, 2010. "Characterization of the Walrasian equilibria of the assignment model," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 6-20, January.
  21. H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
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  24. 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.
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