Bidding for envy-freeness: A procedural approach to n-player fair-division problems

Abstract.

We develop a procedure for implementing an efficient and envy-free allocation of m objects among n individuals with the possibility of monetary side-payments, assuming that players have quasi–linear utility functions. The procedure eliminates envy by compensating envious players. It is fully descriptive and says explicitly which compensations should be made, and in what order. Moreover, it is simple enough to be carried out without computer support. We formally characterize the properties of the procedure, show how it establishes envy-freeness with minimal resources, and demonstrate its application to a wide class of fair-division problems.