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Individually Rational Rules for the Division Problem when the Number of Units to be Allotted is Endogenous

Bergantiños, Gustavo and Massó, Jordi and Neme, Alejandro (2019): Individually Rational Rules for the Division Problem when the Number of Units to be Allotted is Endogenous.

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Abstract

We study individually rational rules to be used to allot, among a group of agents, a perfectly divisible good that is freely available only in whole units. A rule is individually rational if, at each preference profile, each agent finds that her allotment is at least as good as any whole unit of the good. We study and characterize two individually rational and efficient rules, whenever agents' preferences are symmetric single-peaked on the set of possible allotments. The two rules are in addition envy-free, but they differ on wether envy-freeness is considered on losses or on awards. Our main result states that (i) the constrained equal losses rule is the unique individually rational and efficient rule that satisfies justified envy-freeness on losses and (ii) the constrained equal awards rule is the unique individually rational and efficient rule that satisfies envy-freeness on awards.

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