Egalitarian-Equivalence and Strategy-Proofness in the Object Allocation Problem with Non-Quasi-Linear Preferences

Hiroki Shinozaki ()
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Hiroki Shinozaki: Graduate School of Economics, Osaka University, 1-7 Machikaneyama, Toyonaka, Osaka 560-0043, Japan

Games, 2022, vol. 13, issue 6, 1-24

Abstract: We consider the problem of allocating heterogeneous objects to agents with money, where the number of agents exceeds that of objects. Each agent can receive at most one object, and some objects may remain unallocated. A bundle is a pair consisting of an object and a payment. An agent’s preference over bundles may not be quasi-linear, which exhibits income effects or reflects borrowing costs. We investigate the class of rules satisfying one of the central properties of fairness in the literature, egalitarian-equivalence , together with the other desirable properties. We propose (i) a novel class of rules that we call the independent second-prices rules with variable constraints and (ii) a novel condition on constraints that we call respecting the valuation coincidence. Then, we establish that the independent second-prices rule with variable constraints that respects the valuation coincidence is the only rule satisfying egalitarian-equivalence , strategy-proofness , individual rationality , and no subsidy for losers . Our characterization result implies that in the case of three or more agents, there are few opportunities for agents to receive objects under a rule satisfying egalitarian-equivalence and the other desirable properties, which highlights the strong tension between egalitarian-equivalence and efficiency . In contrast, in the case of two agents and a single object, egalitarian-equivalence is compatible with efficiency .

Keywords: egalitarian-equivalence; strategy-proofness; efficiency; non-quasi-linear preferences; second-price rule; independent second-prices rule; independent second-prices rule with variable constraints; multi-object auctions (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2022
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