Let them cheat! (Q423773)

The paper considers the problem of fairly allocating a bundle of privately appropriable and infinitely divisible goods among a group of agents, which have equal rights on these goods. To make the objective of fairness operational, the paper proposes to measure an agent's required sacrifice at an allocation by the size of the set of feasible bundles that he/she prefers to his/her assignment and to select the allocations at which sacrifices are equal across agents and this common sacrifice is minimal. The resulting solution is referred to as the ``equal-sacrifice'' solution, and is proved to be well-defined under general assumptions on preferences, while under some very mild additional monotonicity assumptions, equal-sacrifice allocations are also efficient. The manipulability of this solution is also examined by identifying, under a mild monotonicity condition on preferences and the assumption that all goods are normal, the equilibrium allocations of the manipulation game associated with this solution. The main result of this examination is that the set of equilibrium outcomes of the manipulation game associated with the equal-sacrifice solution coincides with the set of equal-constrained Walrasian allocations for the true preferences. Finally, it is shown that if normality of goods is dropped, then equilibrium allocations may not be equal-division constrained Walrasian.