Refugee relocation: A mechanism design approach

This paper introduces a new mechanism to distribute refugees within the European Union. The usual approach of assigning mandatory refugee quotas has been heavily opposed by several countries. Our mechanism adjusts these quotas to countries’ preferences on immigration. All countries become weakly better off, even though they do not exchange monetary transfers, which are ethically controversial. We formally model refugee relocation as a division problem with single-peaked preferences. Our ‘quota adjustment mechanism’ is the only one satisfying strategy-proofness, Pareto efficiency and a novel concept of fairness that takes account of the asymmetry across countries.