FAIR DIVISION UNDER ASYMMETRIC INFORMATION

This paper considers the situation in which a single indivisible object has to be allocated to one person out of a group whose members all have equal rights to it. Different persons value the object differently and each person only knows his own value exactly. The question is who should get the object and by how much this person should compensate the others in order to guarantee a fair and efficient allocation. After having shown that several well-known methods perform unsatisfactory, we derive an impossibility theorem showing that some classical fair division methods cannot be implemented when there is incomplete information. Finally, we give examples of mechanisms that do guarantee fair and efficient outcomes.

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