Serial dictatorship and Pareto optimality

Abstract

In a deterministic allocation problem in which each agent is entitled to receive exactly one object, an allocation is Pareto optimal if and only if it is the outcome of a serial dictatorship. We extend the definition of serial dictatorship to settings in which some agents may be entitled to receive more than one object, and study the efficiency and uniqueness properties of the equilibrium allocations. We prove that subgame perfect equilibrium allocations of serial dictatorship games are not necessarily Pareto optimal; and generally not all Pareto optima can be implemented as subgame perfect equilibrium allocations of serial dictatorship games, except in the 2-agent separable preference case. Moreover, serial dictatorship games do not necessarily have unique subgame perfect equilibrium allocations, except in the 2-agent case, hence their outcomes are indeterminate and manipulable.