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Cake Division by Majority DecisionHans GersbachSwiss Federal Institute of Technology Zurich, (CER-ETH); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR) Bernhard Pachlaffiliation not provided to SSRN December 2006 CESifo Working Paper Series No. 1872 Abstract: We consider a collective choice process where three players make proposals sequentially on how to divide a given quantity of resources. Afterwards, one of the proposals is chosen by majority decision. If no proposal obtains a majority, a proposal is drawn by lot. We establish the existence of the set of subgame perfect equilibria, using a suitable refinement concept. In any equilibrium, the first agent offers the whole cake to the second proposal-maker, who in turn offers the whole cake back to the first agent. The third agent is then indifferent about dividing the cake between himself and the first or the second agent.
Number of Pages in PDF File: 62 Keywords: division of a cake, majority decisions, tie-breaking rules JEL Classification: C72, D30, D39, D72 working papers seriesDate posted: January 12, 2007Suggested CitationContact Information
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