Nine objections to Steiner and Wolff on land disputes

Abstract

In the July 2003 Analysis, Hillel Steiner and Jonathan Wolff (2003) propose a framework for “resolving disputed land claims between competing nations or ethnic groups.” The idea is that we should auction off the land, with the loser of the auction getting the money. While this might mean that the richer party will normally end up with the land, and this is normally not thought to be a good thing, if the auction is conducted as they specify “it will turn out that the other party ends up with something which, in the circumstances, it prefers to the land: lots of money.” Actually, it isn’t so clear that this is what will result. Let’s say we have a particular parcel of land that groups A and B want. They each want it quite strongly, but B has deeper pockets than A, so while A would be prepared to pay 8 for the land, B would be prepared to pay 12. For the auction process to function, there must be a minimum bid increment, I’ll say it is 2 . Assume that B has just bid 4, A must now choose whether to bid 4 2 or accept B’s bid. And assume for now that A is not bidding tactically, it only makes a bid if it would prefer to win the auction with that bid than accept B’s bid. This assumption will be relaxed below. So for now, A must decide whether it prefers to be given 4, or to get the land for 4 2 . Since it values the land at 8, and since it will give up 8 1 2 to buy the land (the 4 1 2 it will pay, plus the 4 it would have received from B) it may well decide to just accept the bid. But now it has ended up with something it definitely does not prefer to the land, since it just accepted a bid for 4. There are two assumptions at play here. One is that A doesn’t bid tactically, which I shall return to a bit. The other is that how much A will pay for the land is not affected by receiving B’s 4. That is, I assume that the marginal utility of money is relatively constant for A over the ranges of money at play in the auction. This assumption might be false if we’re dealing with a very large or valuable body of land, but it’s not unreasonable in most circumstances. (Space prevents a complete study of what happens if we take the declining marginal utility of money completely into account. Roughly, the effect is that some of my criticisms are slightly vitiated.) Now while these assumptions might be false, Steiner and Wolff give us no reason to be certain they are false. So for all they’ve said we could have a situation just like this one, where the poorer party ends up with something it wants much less than the land. Hence