Strategy-proofness and efficiency in a simple production economy

Sungwhee Shin () and Sang-Chul Suh
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Sungwhee Shin: Department of Economics, University of Windsor, Ontario Canada N9B3P4

Social Choice and Welfare, 2000, vol. 17, issue 3, 523-532

Abstract: We consider an economy with two agents, "firm" and "worker." The firm owns a technology which transforms a single input into a single output and the worker owns a limited amount of input good, for example, leisure. The firm is interested in profit measured in terms of output and the worker's preferences are defined over the input-output space. Manipulability comes not only from a lack of information about the (worker's) preferences but also about the technology. With a possibility for manipulation, can we still obtain efficient allocations? We show that there is no allocation mechanism which is Pareto efficient, strategy-proof, and non-dictatorial.

Date: 2000-05-02
Note: Received: 30 March 1998/Accepted: 06 July 1999
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