Strategy-Proofness and Efficiency in a Labour Production Economy with Unequal Skills

This article characterises the class of strategy-proof and efficient rules in a labour production economy in which technology is linear and individuals may have unequal labour productivities. As each individual’s wage per hour is determined by their labour productivity under efficiency, an allocation rule reduces to a lump-sum transfer rule. We characterise how strategy-proofness and other axioms put restrictions on the class of lump-sum transfer rules, and we show that what we can do using lump-sum transfers is quite limited.