Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5071692 | Games and Economic Behavior | 2014 | 14 Pages |
Abstract
We study a standard model of exchange economies with individual endowments. It is well known that no rule is individually rational, efficient, and strategy-proof. In order to quantify the extent of this impossibility, we parametrize axioms on allocation rules. Given an axiom A, a parametrization of A is a continuum of axioms {δ-A}δâ[0,1] such that (i) δ-A is equivalent to A if and only if δ=1; (ii) δ-A is vacuous if and only if δ=0; and (iii) for each pair δ,δâ²â[0,1] with δ<δâ², δâ²-A implies δ-A. Thus, as δ decreases from 1 to 0, δ-A weakens monotonically, eventually to a vacuous requirement. We consider two parametrizations {δ-efficiency}δ â [0,1] and {δ-strategy-proofness}δ â [0,1], and investigate their compatibility with individual rationality for the class of two-agent economies defined on the linear preference domain. We show that (i) for each δâ(0,1], no rule is individually rational, δ-efficient, and strategy-proof; and (ii) for each δâ(0,1], no rule is individually rational, efficient, and δ-strategy-proof.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Wonki Jo Cho,