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Allocation of fixed costs and the weighted Shapley value

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  • DEHEZ, Pierre

    ()
    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

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    Abstract

    The weighted value was introduced by Shapley in 1953 as an asymmetric version of his value. Since then several approximations have been proposed including one by Shapley in 1981 specifically addressed to cost allocation, a context in which weights appear naturally. It was at the occasion of a comment in which he only stated the axioms. The present paper offers a proof of Shapley's statement as well as an alternative set of axioms. It is shown that the value is the unique rule that allocates additional fixed costs fairly: only the players who are concerned contribute to the fixed cost and they contribute in proportion to their weights. A particular attention is given to the case where some players are assigned a zero weight.

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    Bibliographic Info

    Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2009035.

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    Date of creation: 01 May 2009
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    Handle: RePEc:cor:louvco:2009035

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    Keywords: cost allocation; Shapley value; fixed cost;

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    Cited by:
    1. Pierre Dehez, 2010. "Cooperative provision of indivisible public goods," Working Papers of BETA 2010-14, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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