Efficient reallocation of indivisible resources: Pair-efficiency versus Pareto-efficiency

Abstract: In the object reallocation problem, achieving Pareto-efficiency is desirable, but may be too demanding for implementation purposes. In contrast, pair-efficiency, which is the minimal efficiency requirement, is more suitable. Despite being a significant relaxation, however, pair-efficiency ensures Pareto-efficiency for any strategy-proof and individually rational rule when agents' preferences are unrestricted. What if agents' preferences have specific restricted structures, such as single-peakedness or single-dippedness? We often encounter such situations in real-world scenarios. This study aims to investigate whether pair-efficiency is sufficient to ensure Pareto-efficiency in such cases. Our main contribution in this paper is establishing the equivalence between pair-efficiency and Pareto-efficiency when dealing with single-peaked or single-dipped preference profiles. This equivalence holds without needing to assume any other properties of the rule. We further show that both the single-peaked domain and the single-dipped domain are the "maximal" domains where this equivalence holds.