Minimizing Regret When Dissolving a Partnership

25 Pages Posted: 2 Jan 2009 Last revised: 30 Jan 2009

See all articles by Stergios Athanassoglou

Stergios Athanassoglou

Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center for Climate Change

Steven J. Brams

New York University (NYU) - Wilf Family Department of Politics

Jay Sethuraman

Columbia University

Date Written: November 1, 2008

Abstract

We study the problem of dissolving an equal-entitlement partnership when the objective is to minimize maximum regret. We initially focus on the family of linear-pricing mechanisms and derive regret-optimizing strategies. We also demonstrate that there exist linear-pricing mechanisms satisfying ex-post efficiency. Next, we analyze a binary-search mechanism which is ex-post individually rational. We discuss connections with the standard Bayesian-Nash framework for both linear and binary-search mechanisms. On a more general level, we show that if entitlements are unequal, ex-post efficiency and ex-post individual rationality impose significant restrictions on permissible mechanisms. In particular, they rule out both linear and binary-search mechanisms.

Keywords: Partnership dissolution, fair division, minimax regret, ex-post efficiency, ex-post rationality, Bayesian-Nash equilibrium

JEL Classification: C72, C78, D61, L14

Suggested Citation

Athanassoglou, Stergios and Brams, Steven and Sethuraman, Jay, Minimizing Regret When Dissolving a Partnership (November 1, 2008). Available at SSRN: https://ssrn.com/abstract=1322066 or http://dx.doi.org/10.2139/ssrn.1322066

Stergios Athanassoglou (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center for Climate Change ( email )

C.so Magenta 63
Milano, 20123
Italy

Steven Brams

New York University (NYU) - Wilf Family Department of Politics ( email )

Dept. of Politics
19 West 4th St., 2nd Fl.
New York, NY 10012
United States
212-998-8510 (Phone)
212-995-4184 (Fax)

HOME PAGE: http://politics.as.nyu.edu/object/stevenbrams.html

Jay Sethuraman

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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