Strategy-proof and nonbossy allocation of indivisible goods and money

Lars-Gunnar Svensson and Bo Larsson ()

Economic Theory, 2002, vol. 20, issue 3, 483-502

Abstract: Which strategy-proof nonbossy mechanisms exist in a model with a finite number of indivisible goods (houses, jobs, positions) and a perfectly divisible good (money)? The main finding is that only a finite number of distributions of the divisible good is consistent with strategy-proofness and nonbossiness. Under various additional assumptions - neutrality, individual rationality, object efficiency, weak decentralization - the distribution of the divisible good is further restricted. For instance, under neutrality the outcome of the mechanism can have only one distribution, which is hence independent of individual preferences. In this case the mechanism becomes serially dictatorial. On the other hand, individual rationality leads to a fixed price equilibrium with a well-defined rationing method (Gale's top-trading cycle procedure).

Keywords: Strategy-proof; Nonbossy; Indivisible object; Housing market. (search for similar items in EconPapers)
JEL-codes: C71 C78 D71 D78 (search for similar items in EconPapers)
Date: 2002-03-21
Note: Received: October 3, 2000; revised version: August 10, 2001
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Citations: View citations in EconPapers (30)

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