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Games 2013, 4(1), 21-37; doi:10.3390/g4010021

An Equilibrium Analysis of Knaster’s Fair Division Procedure

Department of Economics, Finance, and Legal Studies, University of Alabama, Tuscaloosa, AL 35487, USA
Received: 19 October 2012 / Revised: 8 January 2013 / Accepted: 8 January 2013 / Published: 18 January 2013
(This article belongs to the Special Issue Mechanism Design)
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Abstract

In an incomplete information setting, we analyze the sealed bid auction proposed by Knaster (cf. Steinhaus (1948)). This procedure was designed to efficiently and fairly allocate multiple indivisible items when participants report their valuations truthfully. In equilibrium, players do not follow truthful bidding strategies. We find that, ex-post, the equilibrium allocation is still efficient but may not be fair. However, on average, participants receive the same outcome they would have received if everyone had reported truthfully—i.e., the mechanism is ex-ante fair.
Keywords: fair division; auction fair division; auction
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

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Van Essen, M. An Equilibrium Analysis of Knaster’s Fair Division Procedure. Games 2013, 4, 21-37.

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