Rochester Borrowing-proofness Borrowing-proofness

We formulate and study the requirement on an allocation rule that no agent should be able to benefit by augmenting his endowment through borrowing resources from the outside world (alternatively, by simply exaggerating it). We show that the Walrasian rule is not “borrowing-proof” even on standard domains. More seriously, no efficient selection from the endowments-lower-bound correspondence, or from the no-envy-in-trades correspondence, or from the egalitarianequivalent-in-trades correspondence is borrowing-proof. These impossibilities hold even on the domain of economies with homothetic preferences. Key-works: borrowing-proofness. Endowment lower bound. No-envy-intrades. Egalitarian-equivalent-in-trades. JEL classification numbers: