Is an Auction the Best Way to Solve the Roommate/Rent Dilemma?

(Photo: Matthew Jording)

We’ve blogged before about the very common roommate/rent dilemma — that is, how to fairly split rent among roommates given that different rooms have different features. A reader named Michael Jancsy writes in with an auction solution and a request for feedback:

I recently designed an auction website [called “The Rent Is Too Damn Fair”] to help friends split apartments … The auction works by allowing each roommate to bid on each room in an apartment, and then identifies the permutation of roommates to rooms with the largest consumer surplus (sum of all bids minus rent paid to landlord) to decide who should live in what room. Each person’s rent is then calculated by dividing the surplus evenly over the occupants, so that the difference between a person’s bid and the rent paid is the same for each person. 

It’s a pretty rudimentary design, but I hope it will be superior to the methods more commonly used, such as basing rent only on square footage. I am somewhat concerned, though, that it is not strategy-proof.

I believe what Michael means by “strategy-proof” is that some people will likely try to game the auction to their advantage. So: feel free to give him your general feedback but especially with an eye toward his model’s shortcomings.