Measuring productivity in networks: A game-theoretic approach

Measuring individual productivity (or equivalently distributing the overall productivity) in a network structure of workers displaying peer effects has been a subject of ongoing interest in many areas ranging from academia to industry. In this paper, we propose a novel approach based on cooperative game theory that takes into account the peer effects of worker productivity represented by a complete bipartite network of in- teractions. More specifically, we construct a series of cooperative games where the characteristic function of each coalition of workers is equal to the sum of each worker intrinsic productivity as well as the productivity of other workers within a distance discounted by an attenuation factor. We show that these (truncated) games are balanced and converge to a balanced game when the distance of influence grows large. We then provide an explicit formula for the Shapley value and propose an alternative coalitionally stable distribution of productivity which is computationally much more tractable than the Shapley value. Lastly, we characterize this alternative distribution based on three sensible properties of a logistic network. This analysis enhances our understanding of game-theoretic analysis within logistics networks, offering valuable insights into the peer effects’ impact when assessing the overall productivity and its distribution among workers.