Adjusted winner procedure
The adjusted winner procedure is a procedure for envy-free item assignment. It 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.[1]
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.[2]
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.
Software patent
This algorithm is patented[2] in the United States. Some concerns have been raised that this patent is overly broad.
References
- ↑ Steven J. Brams; Alan D. Taylor (1996). Fair division: from cake-cutting to dispute resolution. Cambridge University Press. ISBN 978-0-521-55644-6.
- 1 2 U.S. Patent 5,983,205, Computer-based method for the fair division of ownership of goods.