Fair (and not so fair) division

Pratt, John W.

Drawbacks of existing procedures are illustrated and a method of efficient fair division is proposed that avoids them. Given additive participants' utilities, each item is priced at the geometric mean (or some other function) of its two highest valuations. The utilities are scaled so that the market clears with the participants' purchases proportional to their entitlements. The method is generalized to arbitrary bargaining sets and existence is proved. For two or three participants, the expected utilities are unique. For more, under additivity, the geometric mean separates the prices where uniqueness holds and where it fails; it holds for the geometric mean except in one case where refinement is needed.