Fairness and Efficiency in a Random Assignment: Three Impossibility Results

Alexander Nesterov

No 2014006, BDPEMS Working Papers from Berlin School of Economics

Abstract: This paper considers the problem of allocating N indivisible objects among N agents according to their preferences when transfers are not allowed, and studies the tradeoff between fairness and efficiency in the class of strategy-proof mechanisms. The main finding is that for strategy-proof mechanisms the following efficiency and fairness criteria are mutually incompatible: (1) Ex-post efficiency and envy-freeness, (2) ordinal efficiency and weak envy-freeness and (3) ordinal efficiency and equal division lower bound. Result (1) is the first impossibility result for this setting that uses ex-post efficiency; results (2) and (3) are more relevant for practical implementation than similar results in the literature. In addition, for N = 3 the paper strengthens the characterization result by Bogomolnaia and Moulin (2001): the random serial dictatorship mechanism is the unique strategy-proof, ex-post efficient mechanism that eliminates strict envy between agents with the same preferences. Creation Date: 2014-11-06

Keywords: random assignment; random serial dictatorship; strategy-proofness; ex-post efficiency; weak envy-freeness; equal division lower bound (search for similar items in EconPapers)
JEL-codes: C78 D71 D78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mic
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Citations: View citations in EconPapers (2)

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Working Paper: Fairness and efficiency in a random assignment: Three impossibility results (2014)
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