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A Solomonic solution to the problem of assigning a private indivisible good

Efthymios Athanasiou ()

Games and Economic Behavior, 2013, vol. 82, issue C, 369-387

Abstract: A benevolent Planner wishes to assign an indivisible private good to n claimants, each valuing the object differently. Individuals have quasi-linear preferences. Therefore, the possibility of transfers is allowed. A second-best efficient mechanism is a strategy-proof and anonymous mechanism that is not Pareto dominated by another strategy-proof and anonymous mechanism. In this context, we identify three conditions that are necessary and, together with Voluntary Participation, sufficient for a mechanism to be second-best efficient. This set includes mechanisms that destroy the good at certain profiles. For domains comprising two individuals we provide an explicit characterization of the family of second-best efficient mechanisms.

Keywords: Indivisible private good; Quasi-linear preferences; Strategy-Proofness; Vickrey–Clarke–Groves mechanism (search for similar items in EconPapers)
JEL-codes: D71 D78 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.geb.2013.07.007

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Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:369-387