MR - What's Fair? Lesson

What's Fair? Lesson

One method to guarantee "fairness" is the adjusted winner procedure. Suppose you need to settle a dispute involving issues or objects.

A Vickrey Auction is a method of auction that uses a sealed bid. Each party bids independently and submits a sealed bid for the objects. For example, for bids on a fine art painting of $400, $435, $580, $700, the winner or highest bidder would pay $580 for the painting.

Divide & Choose is another method of fair division. The basic principle of the method is that one person divides the item and the other person chooses which share they feel is fair.  

In some cases, people may want to divide something that has other factors to consider besides size. Cake Division Procedure is used to allocate cake for n players so that each player has received 1/n of the whole in his own estimation. Say we have a strawberry and vanilla cake, and you really don't like strawberry flavor cake. If the cake is split in half separating the cake with half vanilla and half strawberry, you will not "value" the half equal. You would not be "envy free" if you received the strawberry side. You may place a value of ¾ on the vanilla side and ¼ on the strawberry side.

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