Minimizing regret when dissolving a partnership

Athanassoglou, Stergios and Brams, Steven J. and Sethuraman, Jay (2008): Minimizing regret when dissolving a partnership.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Partnership dissolution; minimax regret; fair division; allocative efficiency
• Subjects: D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory ; Matching Theory; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict ; Conflict Resolution ; Alliances ; Revolutions; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games

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