English

Efficient Defection: Overage-Proportional Rationing Attains the Cooperative Frontier

Theoretical Economics 2025-09-17 v3 Optimization and Control

Abstract

We study a noncooperative nn-player game of slack allocation in which each player jj has entitlement Lj>0L_j>0 and chooses a claim Cj0C_j\ge0. Let vj=(CjLj)+v_j=(C_j-L_j)_+ (overage) and sj=(LjCj)+s_j=(L_j-C_j)_+ (slack); set X=jvjX=\sum_j v_j and I=jsjI=\sum_j s_j. At the end of the period an overage-proportional clearing rule allocates cooperative surplus II to defectors in proportion to vjv_j; cooperators receive CjC_j. We show: (i) the selfish outcome reproduces the cooperative payoff vector (L1,,Ln)(L_1,\dots,L_n); (ii) with bounded actions, defection is a weakly dominant strategy; (iii) within the α\alpha-power family, the linear rule (α=1\alpha=1) is the unique boundary-continuous member; and (iv) the dominant-strategy outcome is Strong Nash under transferable utility and hence coalition-proof (Bernheim et al., 1987). We give a policy interpretation for carbon rationing with a penalty collar.

Keywords

Cite

@article{arxiv.2509.07145,
  title  = {Efficient Defection: Overage-Proportional Rationing Attains the Cooperative Frontier},
  author = {Florian Lengyel},
  journal= {arXiv preprint arXiv:2509.07145},
  year   = {2025}
}

Comments

10 pages. Corrections to the boundary allocation in Appendix A to preserve budget balance; clarification of the dominant strategy result; bounded-actions paragraph added; aggregate-identity discussion tightened

R2 v1 2026-07-01T05:27:20.634Z