On the manipulability of efficient exchange rules

Ryan Tierney

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: There is a divisible commodity and money. Each agent has an en-dowment of the two goods and continuous, monotone, convex preferences over bundles. Agents may benefit from trade. An exchange rule is a mapping that, for each profile of preferences, calculates for each agent a trade that he finds acceptable, given his preferences. It is known that no strategy-proof exchange rule always yields Pareto efficient outcomes. Strategy-proofness, however, is quite strong. We may instead ask: if we insist upon Pareto efficiency, how frequently will the exchange rule be manipulable? We identify a large sub-domain, D, of quasilinear economies on which any efficient exchange rule will be densely manipulable. Moreover, we show the set of manipulable economies is non-meagre. For generic economies outside of D, there exist rules that are locally non-manipulable.

Date: 2016-12
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0987

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