Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2006:10: Coalition Strategy-Proofness and Fairness

Lars-Gunnar Svensson ()
Additional contact information
Lars-Gunnar Svensson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: This paper considers a fair division problem with indivisible objects, like jobs, houses, positions, etc., and one divisible good (money). The individuals consume money and one object each. The class of fair allocation rules that are strategy-proof in the strong sense that no coalition of individuals can improve the allocation for all of its members, by misrepresenting their preferences, is characterized. It turns out that given a regularity condition, the outcome of a fair and coalition strategy-proof allocation rule must maximize the use of money subject to upper quantity bounds determined by the allocation rule. Due to these restrictions the outcomes of the allocation rule are Pareto efficient only for some preference profiles. In a multi-object auction interpretation of the model, the result is a complete characterization of coalition strategy-proof auction rules.

Keywords: Indivisibilities; fairness; coalition strategy-proofness; wages; multiple-object auction

JEL-codes: C68; C71; C78; D61; D63; D71; D78

24 pages, April 27, 2006

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