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Incremental cost sharing: Characterization by coalition strategy-proofness

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  • HervÊ Moulin

    ()
    (Department of Economics, Duke University, Box 90097, Durham, NC 27708-0097, USA)

Abstract

Each one of n users consumes an idiosyncratic commodity produced in indivisible units. The n commodities are jointly produced by a central facility and total cost must be shared by the users. A "sequential stand alone mechanism" shares costs incrementally according to a fixed ordering of the users: the first user always pays stand alone cost, the second pays the stand alone cost of the first two users minus that of the first and so on. If the second derivatives of costs are of a constant sign, such a method yields a unique strong equilibrium at every profile of convex preferences in the game where each user chooses his own demand. This equilibrium, in turn, defines a coalition strategy-proof social choice function. Under decreasing marginal costs and submodular costs, the sequential stand alone mechanisms are almost characterized by these properties; the only exception is the binary demand case (each agent consumes zero or one unit) where a rich family of cost sharing methods (the Shapley value among them) yields a coalition strategy-proof equilibrium selection. Under increasing marginal costs and supermodular costs, coalition strategy-proofness characterizes a richer family of cost sharing methods: they give out one unit at a time while charging marginal costs, with the users taking turns according to a sequence fixed in advance. These methods contain serial cost sharing as a limit case.

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Bibliographic Info

Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 16 (1999)
Issue (Month): 2 ()
Pages: 279-320

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Handle: RePEc:spr:sochwe:v:16:y:1999:i:2:p:279-320

Note: Received: 8 July 1997/Accepted: 22 January 1998
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Cited by:
  1. Ruben Juarez & Rajnish Kumar, 2012. "Implementing Efficient Graphs in Connection Networks," Working Papers 201203, University of Hawaii at Manoa, Department of Economics.
  2. Balireddi, Sindhura & Uhan, Nelson A., 2012. "Cost-sharing mechanisms for scheduling under general demand settings," European Journal of Operational Research, Elsevier, vol. 217(2), pages 270-277.
  3. SPRUMONT, Yves, 1999. "Coherent Cost-Sharing Rules," Cahiers de recherche 9902, Universite de Montreal, Departement de sciences economiques.
  4. Aggarwal, Gagan & Fiat, Amos & Goldberg, Andrew V. & Hartline, Jason D. & Immorlica, Nicole & Sudan, Madhu, 2011. "Derandomization of auctions," Games and Economic Behavior, Elsevier, vol. 72(1), pages 1-11, May.
  5. Archer, Aaron & Feigenbaum, Joan & Krishnamurthy, Arvind & Sami, Rahul & Shenker, Scott, 2004. "Approximation and collusion in multicast cost sharing," Games and Economic Behavior, Elsevier, vol. 47(1), pages 36-71, April.
  6. Michel Le Breton & Juan D. Moreno-Ternero & Alexei Savvateev & Shlomo Weber, 2010. "Stability and Fairness in Models with a Multiple Membership," Working Papers 2010-10, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
  7. Mehta, Aranyak & Roughgarden, Tim & Sundararajan, Mukund, 2009. "Beyond Moulin mechanisms," Games and Economic Behavior, Elsevier, vol. 67(1), pages 125-155, September.
  8. Chen, Jing & Micali, Silvio, 2012. "Collusive dominant-strategy truthfulness," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1300-1312.
  9. Ruben Juarez, 2008. "The worst absolute surplus loss in the problem of commons: random priority versus average cost," Economic Theory, Springer, vol. 34(1), pages 69-84, January.
  10. Ruben Juarez, 2012. "Group Strategyproof Cost Sharing: The Role of Indifferences," Working Papers 201202, University of Hawaii at Manoa, Department of Economics.
  11. Leroux, Justin, 2004. "Pooling Private Technologies: Improving upon Autarky," Working Papers 2004-08, Rice University, Department of Economics.
  12. Salvador Barberà & Dolors Berga & Bernardo Moreno, 2012. "Group strategy-proof social choice functions with binary ranges and arbitrary domains: characterization results," International Journal of Game Theory, Springer, vol. 41(4), pages 791-808, November.
  13. Leroux, Justin, 2005. "Strategyproof Profit Sharing in Partnerships: Improving upon Autarky," Working Papers 2005-05, Rice University, Department of Economics.
  14. Friedman, Eric J., 2002. "Strategic properties of heterogeneous serial cost sharing," Mathematical Social Sciences, Elsevier, vol. 44(2), pages 145-154, November.

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