Fairness and efficiency in strategy-proof object allocation mechanisms

Alexander Nesterov

Journal of Economic Theory, 2017, vol. 170, issue C, 145-168

Abstract: I consider the problem of allocating N indivisible objects among N agents according to their preferences when transfers are absent and an outside option may exist. I study the tradeoff between fairness and efficiency in the class of strategy-proof mechanisms. The main finding is that for strategy-proof mechanisms the following efficiency and fairness criteria are mutually incompatible: (1) ex-post efficiency and envy-freeness, (2) ordinal efficiency and weak envy-freeness, and (3) ordinal efficiency and equal division lower bound. Result 1 is the first impossibility result for this setting that uses ex-post efficiency; results 2 and 3 are more practical than similar results in the literature. In addition, for N=3, I give two characterizations of the celebrated random serial dictatorship mechanism: it is the unique strategy-proof, ex-post efficient mechanism that (4) provides agents that have the same ordinal preferences with assignments not dominated by each other (weak envy-freeness among equals), or (5) provides agents that have the same cardinal preferences with assignments of equal expected utility (symmetry). These results strengthen the characterization by Bogomolnaia and Moulin (2001); result 5 implies the impossibility result by Zhou (1990).

Keywords: Probabilistic assignment; Random serial dictatorship; Strategy-proofness; Ex-post efficiency; Weak envy-freeness; Equal division lower bound (search for similar items in EconPapers)
JEL-codes: C78 D71 D78 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:170:y:2017:i:c:p:145-168

DOI: 10.1016/j.jet.2017.05.004

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