A Game Theoretical Approach to Sharing Penalties and Rewards in Projects
AbstractThis paper analyzes situations in which a project consisting of several activities is not realized according to plan. Ifthe project is expedited, a reward arises. Analogously, a penalty arises if the project is delayed. This paper considersthe case of arbitrary nondecreasing reward and penalty functions on the total expedition and delay, respectively.Attention is focused on how to divide the total reward (penalty) among the activities: the core of a correspondingcooperative project game determines a set of stable allocations of the total reward (penalty). In the definition ofproject games, surplus (cost) sharing mechanisms are used to take into account the specific characteristics of thereward (penalty) function at hand. It turns out that project games are related to bankruptcy and taxation games.This relation allows us to establish the nonemptiness of the core of project games.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 09-090/1.
Date of creation: 20 Oct 2009
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Project planning; delay; expedition; cost sharing mechanism; surplus sharing mechanism; bankruptcy;
Other versions of this item:
- Estévez-Fernández, Arantza, 2012. "A game theoretical approach to sharing penalties and rewards in projects," European Journal of Operational Research, Elsevier, vol. 216(3), pages 647-657.
- Estevez Fernandez, M.A., 2008. "A Game Theoretical Approach to Sharing Penalties and Rewards in Projects," Discussion Paper 2008-84, Tilburg University, Center for Economic Research.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-15 (All new papers)
- NEP-GTH-2010-05-15 (Game Theory)
- NEP-PPM-2010-05-15 (Project, Program & Portfolio Management)
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