Groves mechanisms and welfare bounds in a variable population setting

Abstract

In the problem of allocating indivisible goods when monetary transfers are possible, if prefer- ences are quasilinear, then the Groves mechanisms are the only mechanisms which assign indivisible goods in an e¢ cient way and induce the agents to report their true preferences. We characterize the class of Groves mechanisms that respect the identical-preferences lower-bound: each agent should be at least as well o¤ as in an hypothetical economy where all agents have the same preference as hers, no agent envies another, and the budget is balanced. We also study the implications on Groves mechanisms of imposing variable population axioms together with welfare bounds.