On Effcient and Procedurally-Fair Equilibrium Allocations in Sharing Games

In pruoduction economies with skill differences, this paper discusses resource allocation schemes which are consistent with two notions of procedural fairness: labor sovereignty and equal-division-for-equal-work (EDEW)[Kranich(1994)]. The paper first shows that there always exists an efficient EDEW allocation [Kranich(1994)], which is supported as a Nash equilibrium of a game induced by a sharing mechanism which satisfies the above two principles. Second, since there still remains the implementation problem of efficient EDEW allocations, the paper provides a selection mechanism which itself satisfies labor sovereignty and EDEW, and appropriately selects a sharing mechanism which supports an efficient EDEW allocation under any particular economy. As a result, the paper shows that efficient EDEW allocations can be implemented in Nash equilibria via this selection mechanism.