Minimizing regret when dissolving a partnership

Stergios Athanassoglou, Steven J. Brams and Jay Sethuraman

MPRA Paper from University Library of Munich, Germany

Abstract: We study the problem of dissolving an equal-entitlement partnership when the objective is to minimize maximum regret. We initially focus on the family of linear-pricing mechanisms and derive regret-optimizing strategies. We also demonstrate that there exist linear-pricing mechanisms satisfying ex-post efficiency. Next, we analyze a binary-search mechanism which is ex-post individually rational. We discuss connections with the standard Bayesian-Nash framework for both linear and binary-search mechanisms. On a more general level, we show that if entitlements are unequal, ex-post efficiency and ex-post individual rationality impose significant restrictions on permissible mechanisms. In particular, they rule out both linear and binary-search mechanisms.

Keywords: Partnership dissolution; minimax regret; fair division; allocative efficiency (search for similar items in EconPapers)
JEL-codes: D63 C78 D74 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2008-11
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:12776

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