Adjusted Winner procedure
Encyclopedia
In problems of fair division
, the adjusted winner procedure is used to partition a bundle of goods between two players in such a way as to minimize envy
and maximize efficiency
and equitability. The procedure is used in divorce
settlements and illustrates the concept of Nash equilibria.
The method is also interesting from an ethical
perspective as it appears to encourage honesty
.
The arbiter, or a computer program, assigns each item to the high bidder. Then, if players' total point values are unequal, the player with the higher total gives its least valuable asset to the other player; this is repeated, with splitting of a divisible asset if necessary, until the players have equal point values. (Ibid.)
As patented, this method does not handle multiple identical assets with diminishing marginal utility.
Fair division
Fair division, also known as the cake-cutting problem, is the problem of dividing a resource in such a way that all recipients believe that they have received a fair amount...
, the adjusted winner procedure is used to partition a bundle of goods between two players in such a way as to minimize envy
Envy-free
In mathematical sociology and especially game theory, envy-free is a property of certain fair division algorithms for a divisible heterogeneous good over which different players may have different preferences....
and maximize efficiency
Pareto efficiency
Pareto efficiency, or Pareto optimality, is a concept in economics with applications in engineering and social sciences. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution.Given an initial allocation of...
and equitability. The procedure is used in divorce
Divorce
Divorce is the final termination of a marital union, canceling the legal duties and responsibilities of marriage and dissolving the bonds of matrimony between the parties...
settlements and illustrates the concept of Nash equilibria.
The method is also interesting from an ethical
Ethics
Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc.Major branches of ethics include:...
perspective as it appears to encourage honesty
Honesty
Honesty refers to a facet of moral character and denotes positive, virtuous attributes such as integrity, truthfulness, and straightforwardness along with the absence of lying, cheating, or theft....
.
Method
Each player is given the list of goods and an equal number of points to distribute among them. He or she assigns a value to each good and submits it sealed to an arbiter.The arbiter, or a computer program, assigns each item to the high bidder. Then, if players' total point values are unequal, the player with the higher total gives its least valuable asset to the other player; this is repeated, with splitting of a divisible asset if necessary, until the players have equal point values. (Ibid.)
As patented, this method does not handle multiple identical assets with diminishing marginal utility.