Budget-balance, fairness and minimal manipulability

, (), , () and , ()
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,: Department of Economics, Lund University
,: Departement de Sciences Economiques and CIREQ, Universite de Montreal
,: Department of Economics, Lund University
Authors registered in the RePEc Author Service: Tommy Andersson and Lars Ehlers

Theoretical Economics, 2014, vol. 9, issue 3

Abstract: A common real-life problem is to fairly allocate a number of indivisible objects and a fixed amount of money among a group of agents. Fairness requires that each agent weakly prefers his consumption bundle to any other agent's bundle. In this context, fairness is incompatible with budget-balance and non-manipulability (Green and Laffont, 1979). Our approach here is to weaken or abandon non-manipulability. We search for the rules which are minimally manipulable among all fair and budget-balanced rules. First, we show for a given preference profile, all fair and budget-balanced rules are either (all) manipulable or (all) non-manipulable. Hence, measures based on counting profiles where a rule is manipulable or considering a possible inclusion of profiles where rules are manipulable do not distinguish fair and budget-balanced rules. Thus, a ``finer'' measure is needed. Our new concept compares two rules with respect to their degree of manipulability by counting for each profile the number of agents who can manipulate the rule. Second, we show that maximally preferred fair allocation rules are the minimally (individually and coalitionally) manipulable fair and budget-balanced allocation rules according to our new concept. Such rules choose allocations with the maximal number of agents for whom the utility is maximized among all fair and budget-balanced allocations.

Keywords: Minimal manipulability; fairness; budget-balance; allocation rules (search for similar items in EconPapers)
JEL-codes: C71 C78 D63 D71 D78 (search for similar items in EconPapers)
Date: 2014-10-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Budget-Balance, Fairness and Minimal Manipulability (2013)
Working Paper: Budget-Balance, Fairness and Minimal Manipulability (2010)
Working Paper: Budget-Balance, Fairness and Minimal Manipulability (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:1346

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