Manipulation via Withholding: A Generalization

Abstract

Postlewaite (1979) and Thomson (1987) showed that every individually-rational and Pareto-optimal allocation mechanism is subject to the problem of withholding with full recovery (Postlewaite) or partial recovery (Thomson). We generalize these results and show that the assumption of individual rationality can be disposed of in both results: the problem of withholding is present for any allocation mechanism in the class of Pareto-optimal mechanisms, whether it is individually rational or not, and whether agents are able to recover the withheld bundle fully or only partially.