Strategy proofness and Pareto efficiency in quasilinear exchange economies

Abstract

In this paper, we revisit a longstanding question on the structure of strategy-proof and Pareto-efficient social choice functions (SCFs) in classical exchange economies (Hurwicz 1972). Using techniques developed by Myerson in the context of auction design, we show that in a specific quasilinear domain, every Pareto-efficient and strategy-proof SCF that satisfies non-bossiness and a mild continuity property is dictatorial. The result holds for an arbitrary number of agents, but the two-person version does not require either the non-bossiness or the continuity assumptions. It also follows that the dictatorship conclusion holds on any superset of this domain. We also provide a minimum consumption guarantee result in the spirit of Serizawa and Weymark (2003).