Stable Partitions in Many Division Problems: The Proportional and the Sequential Dictator Solutions

We study how to partition a set of agents in a stable way when each coalition in the partition has to share a unit of a perfectly divisible good, and each agent has symmetric single-peaked preferences on the unit interval of his potential shares. A rule on the set of preference pro…les consists of a partition function and a solution. Given a preference pro…le, a partition is selected and as many units of the good as the number of coalitions in the partition are allocated, where each unit is shared among all agents belonging to the same coalition according to the solution. A rule is stable at a preference pro…le if no agent strictly prefers to leave his coalition to join another coalition and all members of the receiving coalition want to admit him. We show that the proportional solution and all sequential dictator solutions admit stable partition functions. We also show that stability is a strong requirement that becomes easily incompatible with other desirable properties like e¢ ciency, strategy-proofness, anonymity, and non-envyness. Journal of Economic Literature Classi…cation Number: D71.