Manipulation of Preferences and Relative Utilitarianism

Abstract

Given n agents with von Neumann-Morgenstern utility functions who wish to divide m commodities, consider the n-person noncooperative game with strategies consisting of concave, increasing von Neumann-Morgenstern utility functions, and whose outcomes are the relative utilitarian solution. It is shown that any constrained equal-income competitive equilibrium allocation for the true utilities is a Nash equilibrium outcome for the noncooperative game. Conditions are presented under which these are the only pure strategy equilibrium outcomes.

JEL Classification: C7, D5, D7