Cake Division by Majority Decision
62 Pages Posted: 12 Jan 2007
Date Written: December 2006
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.
Keywords: division of a cake, majority decisions, tie-breaking rules
JEL Classification: C72, D30, D39, D72
Suggested Citation: Suggested Citation