Equity in obviously strategy-proof exchange

Abstract

We propose a novel hierarchy of merit-based fairness axioms for designing exchange rules: Equity under Acclaims (EA) => Equity under Bipartite Acclaims (EBA) => Weak Equity under Bipartite Acclaims (WEBA) => Equity under Unanimous Acclaims (EUA). With this hierarchy, we identify two unambiguous costs of strengthening strategy-proofness to obvious strategy-proofness. First, the applicability of obviously strategy-proof rules is narrowed: under a mild domain richness condition, an obviously strategy-proof rule satisfying EUA, the weakest fairness requirement in our hierarchy, exists if and only if preferences are single-peaked. By contrast, TTC, a strategy-proof rule under unrestricted preferences, satisfies our strongest fairness requirement, EA. Second, the level of attainable fairness is substantially reduced: we establish that no obviously strategy-proof rule satisfies EBA, whereas WEBA is attainable by a new obviously strategy-proof rule, Designator.