On the merit principle in strategic exchange

Peng Liu and Huaxia Zeng

Papers from arXiv.org

Abstract: New fairness notions aligned with the merit principle are proposed for designing exchange rules. We show that for an obviously strategy-proof, efficient and individually rational rule, (i) it rewards one with her favorite object whenever others unanimously perceive her object the best, if and only if preferences are single-peaked, and (ii) an upper bound of fairness attainable is that, if two agents possess objects considered the best by all others divided into two equal-size groups, it is guaranteed that one, not both, receives her favorite. This indicates an unambiguous trade-off between incentives and fairness in the design of exchange rules.

Date: 2025-04, Revised 2025-07
New Economics Papers: this item is included in nep-des and nep-mic
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