Outside the market slides 11+12 meaning od fair

Envy-free

No one values someone else's allocation more

than his/her own.

Equitable

Everyone gets the same fraction of the total value

(according to their own tastes).

Divide & Choose procedure

1 person (the Divider) splits

the objects into 2 piles, each of which he values at 50% of the

total. (Assume that it divides evenly.) Then the other person

(the Chooser) picks her favorite pile, and the Divider gets the

other pile.

Moving Knife procedure

the Divider starts with 2 piles, each

of which he values at 50%. Then he gradually rearranges

them, maintaining his 50% value for each pile, until he

reaches a split where the Chooser also values each pile equally.

The Adjusted Winner Procedure

is envy free, equitable,

and efficient for 2 people

Theorem (The "Life Isn't Fair" Theorem)

When there are more than 2 people, it is possible that no split is

envy free, equitable, and efficient, even if items are divisible. (We

can always get at least 2 of the 3 properties.)

The Shapley Value

each pays the average of his MC across

all possible ways of ordering people.

The Shapley value also works for

more than 2 people

sharing benefits rather than sharing costs