Economic Policy, Problem 2-3, Exercise sheet 2: Decision-Making Mechanisms

Consider the following “divide-the-cake” game: A committee is offered a gift of G dollars to be divided among its n members. All members are assumed to have identical preferences and to be risk neutral. The procedure for selecting a division of G is as follows: one member is selected randomly to propose a division of G. If m or more members of the committee, 1≤m≤n, vote for this proposal it is implemented and the game is over. If the proposal fails, another committee member is chosen at random to make a new proposal.