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Core Allocations in Co-investment Problems

Author

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  • Josep Maria Izquierdo

    (University of Barcelona)

  • Carlos Rafels

    (University of Barcelona)

Abstract

In a theoretical co-investment problem, a set of agents face a surplus-sharing situation with a single input and a single output exhibiting increasing average returns. All agents contribute their respective inputs and expect part of the collective output. Focusing on the core of the problem, we analyze whether a core allocation of the output is acceptable or compatible with a variation of input contributions, where larger payoffs are expected by those agents whose contribution has increased. We state a necessary and sufficient condition for a core allocation to be acceptable. We also introduce and study the acceptable core, that is, those core allocations acceptable for any possible increase of inputs. Finally, we axiomatically characterize when a set-solution that contains acceptable core allocations shrinks into the proportional allocation.

Suggested Citation

  • Josep Maria Izquierdo & Carlos Rafels, 2020. "Core Allocations in Co-investment Problems," Group Decision and Negotiation, Springer, vol. 29(6), pages 1157-1180, December.
    • Handle: RePEc:spr:grdene:v:29:y:2020:i:6:d:10.1007_s10726-020-09700-3
    DOI: 10.1007/s10726-020-09700-3
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