Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150236
Authors: 
Ehlers, Lars
Svensson, Lars-Gunnar
Andersson, Tommy
Year of Publication: 
2014
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 9 [Year:] 2014 [Issue:] 3 [Pages:] 753-777
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.
Subjects: 
Minimal manipulability
fairness
budget-balance
allocation rules
JEL: 
C71
C78
D63
D71
D78
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Article

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