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Bidding for the Surplus: a Non-Cooperative Approach to the Shapley Value. ation

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Author Info

  • Perez-Castrillo, D.
  • Wettstein, D.

Abstract

We consider zero-monotonic environments with transferable utility and propose a simple non-cooperative game to determine how the surplus generated by cooperation is to be shared. First, the players bid for the right to propose a sharing of the surplus. Second, after the winner pays the bids, she makes a proposal to each of the other players. If the proposal is rejected, the rest of the players will play the same game again with the proposer left out. If her proposal is accepted, she forms the grand coalition, keeping its value for herself in exchange for the proposed payments to the rest of the players. We show that the final outcome of any subgame perfect equilibrium of this mechanism always coincides with the vector of the Shapley value payoffs. Finally, we extend our results to implement the weighted Shapley values.

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Bibliographic Info

Paper provided by Tel Aviv in its series Papers with number 24-99.

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Length: 20 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:teavfo:24-99

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Postal: Israel TEL-AVIV UNIVERSITY, THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH, RAMAT AVIV 69 978 TEL AVIV ISRAEL.
Phone: 972-3-640-9255
Fax: 972-3-640-5815
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Web page: http://econ.tau.ac.il/research/foerder.asp
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Related research

Keywords: GAME THEORY ; BIDDING ; ECONOMETRICS;

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Cited by:
  1. David Pérez-Castrillo & David Wettstein, 2003. "An Ordinal Shapley Value for Economic Environments," UFAE and IAE Working Papers 560.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  2. Inés Macho-Stadler & David Pérez-Castrillo & David Wettstein, 2008. "Dividends and Weighted Values in Games with Externalities," Working Papers 366, Barcelona Graduate School of Economics.
  3. Inés Macho-Stadler & David Pérez-Castrillo & David Wettstein, 2004. "Sharing the surplus: A just and efficient proposal for environments with externalities," Working Papers 119, Barcelona Graduate School of Economics.
  4. David Pérez-Castrillo & David Wettstein, 2005. "Implementation of the Ordinal Shapley Value for a three-agent economy," Economics Bulletin, AccessEcon, vol. 3(48), pages 1-8.
  5. Inés Macho & David Pérez-Castrillo & David Wettstein, 2005. "Efficient Bidding with Externalitites," Working Papers 159, Barcelona Graduate School of Economics.
  6. Le Breton, Michel & Van Der Straeten, Karine, 2012. "Alliances Electorales entre Deux Tours de Scrutin : Le Point de Vue de la Théorie des Jeux Coopératifs et une Application aux Elections Régionales de Mars 2010," IDEI Working Papers 710, Institut d'Économie Industrielle (IDEI), Toulouse.
  7. Emilio Calvo & Esther Gutiérrez, 2012. "Weighted Solidarity Values," Discussion Papers in Economic Behaviour 0212, University of Valencia, ERI-CES.
  8. David Pérez-Castrillo & Nicolas Quérou, 2011. "Smooth Multibidding Mechanisms," CESifo Working Paper Series 3394, CESifo Group Munich.
  9. Le Breton, Michel & Van Der Straeten, Karine, 2012. "Alliances Electorales entre Deux Tours de Scrutin : Le Point de Vue de la Théorie des Jeux Coopératifs et une Application aux Elections Régionales de Mars 2010," TSE Working Papers 12-295, Toulouse School of Economics (TSE).

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