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A Procedure for Generating Pareto-Efficient Egalitarian-Equivalent Allocations

Vincent P. Crawford

Abstract

This paper describes a simple, operational procedure that, under reasonable economic assumptions, always generates Pareto-efficient egalitarian-equivalent allocations (PEEEA) when agents know each other's preferences. The procedure constitutes a new, constructive proof of Pazner and Schmeidler's theorems on the existence of PEEEA, and shows that PEEEA, like fair and Pareto-efficient allocations, can be decentralized using less information than is required by the standard market procedure for decentralizing allocations that maximize a neoclassical, individualistic social welfare function.