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New variable-population paradoxes for resource allocation

Author

Listed:
  • William Thomson

    (University of Rochester)

Abstract
We identify previously unnoticed ways in which agents can strategically distort allocation rules, by affecting the set of “active” agents. (i) An agent withdraws with his endowment. (ii) He gives control of his endowment to someone else and withdraws. (iii) He invites someone in and let him use some of his endowment. (iv) He pre-delivers to some other agent the net trade that the rule would assign to that second agent if that second agent had participated. In (i) and (ii), he and his co-conspirator may end up controlling resources that allow them to reach higher welfare levels than they otherwise would. In (iii) and (iv), he may end up with a bundle that he prefers to the one he would have been assigned had he not engaged in the manipulation. We show that (i) the Walrasian rule is not “withdrawing-proof”, nor “endowments-merging–proof, nor “endowments-splitting–proof”, but that it is “pre-delivery–proof”, and that (ii) canonical selections from the egalitarian-equivalence-in-trades solutions satisfy none of the properties.

Suggested Citation

  • William Thomson, 2012. "New variable-population paradoxes for resource allocation," RCER Working Papers 575, University of Rochester - Center for Economic Research (RCER).
    • Handle: RePEc:roc:rocher:575
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    File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_575.pdf
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    References listed on IDEAS

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    12. Ju, Biung-Ghi & Miyagawa, Eiichi & Sakai, Toyotaka, 2007. "Non-manipulable division rules in claim problems and generalizations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 1-26, January.
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    15. Biung-Ghi Ju & Juan D. Moreno-Ternero, 2006. "Progressivity, Inequality Reduction, and Merging-Proofness in Taxation," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200603, University of Kansas, Department of Economics, revised Feb 2006.
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    Cited by:

    1. Nanyang Bu & Siwei Chen & William Thomson, 2014. "Merging and splitting endowments in object assignment problems," RCER Working Papers 587, University of Rochester - Center for Economic Research (RCER).
    2. Thomson, William, 2024. "On the manipulability of allocation rules through endowment augmentation," Games and Economic Behavior, Elsevier, vol. 146(C), pages 91-104.
    3. Wang, Xu & Zhu, Lei & Liu, Pengfei, 2021. "Manipulation via endowments: Quantifying the influence of market power on the emission trading scheme," Energy Economics, Elsevier, vol. 103(C).
    4. William Thomson, 2024. "Constrained dictatorial rules are subject to variable-population paradoxes," Theory and Decision, Springer, vol. 97(2), pages 299-310, September.
    5. Fujinaka, Yuji & Wakayama, Takuma, 2018. "Endowments-swapping-proof house allocation," Games and Economic Behavior, Elsevier, vol. 111(C), pages 187-202.

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