Fair (and Not so Fair) Division

28 Pages Posted: 13 Sep 2007

Date Written: September 2007

Abstract

Drawbacks of existing procedures are illustrated and a method of efficient fair division is proposed that avoids them. Given additive participants' utilities, each item is priced at the geometric mean (or some other function) of its two highest valuations. The utilities are scaled so that the market clears with the participants' purchases proportional to their entitlements. The method is generalized to arbitrary bargaining sets and existence is proved. For two or three participants, the expected utilities are unique. For more, under additivity, the geometric mean separates the prices where uniqueness holds and where it fails; it holds for the geometric mean except in one case where refinement is needed.

Keywords: Fair division, geometric-mean prices, efficient allocation, envy-free, spite, bargaining solutions

JEL Classification: C78, D63

Suggested Citation

Pratt, John W., Fair (and Not so Fair) Division (September 2007). Available at SSRN: https://ssrn.com/abstract=1014149 or http://dx.doi.org/10.2139/ssrn.1014149

John W. Pratt (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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