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Borrowing-proofness

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Abstract

We formulate and study the requirement on an allocation rule that no agent should be able to benefit by augmenting his endowment through borrowing resources from the outside world (alternatively, by simply exaggerating it). We show that the Walrasian rule is not "borrowing-proof" even on standard domains. More seriously, no efficient selection from the endowments-lower-bound correspondence, or from the no-envy-in-trades correspondence, or from the egalitarian-equivalent-in-trades correspondence is borrowing-proof. These impossibilities hold even on the domain of economies with homothetic preferences.

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  • William Thomson, 2009. "Borrowing-proofness," RCER Working Papers 545, University of Rochester - Center for Economic Research (RCER).
  • Handle: RePEc:roc:rocher:545
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    File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_545.pdf
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    References listed on IDEAS

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    1. Murat Atlamaz & Bettina Klaus, 2007. "Manipulation via Endowments in Exchange Markets with Indivisible Goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, pages 1-18.
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    5. Chichilnisky, Graciela & Thomson, William, 1987. "The walrasian mechanism from equal division is not monotonic with respect to variations in the number of consumers," Journal of Public Economics, Elsevier, pages 119-124.
    6. Hyungjun Kim, 2004. "Population monotonic rules for fair allocation problems," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 23(1), pages 59-70, August.
    7. Aumann, R. J. & Peleg, B., 1974. "A note on Gale's example," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 209-211, August.
    8. Gale, David, 1974. "Exchange equilibrium and coalitions : An example," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 63-66, March.
    9. Moulin, Herve & Thomson, William, 1988. "Can everyone benefit from growth? : Two difficulties," Journal of Mathematical Economics, Elsevier, vol. 17(4), pages 339-345, September.
    10. Schmeidler, David & Vind, Karl, 1972. "Fair Net Trades," Econometrica, Econometric Society, pages 637-642.
    11. Elisha A. Pazner & David Schmeidler, 1978. "Egalitarian Equivalent Allocations: A New Concept of Economic Equity," The Quarterly Journal of Economics, Oxford University Press, vol. 92(4), pages 671-687.
    12. Chun, Youngsub & Thomson, William, 1988. "Monotonicity properties of bargaining solutions when applied to economics," Mathematical Social Sciences, Elsevier, vol. 15(1), pages 11-27, February.
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    Keywords

    borrowing-proofness; Endowment lower bound; No-envy-in-trades; Egalitarian-equivalent-in-trades.;

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