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Balanced externalities and the Shapley value

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  • McQuillin, Ben
  • Sugden, Robert

Abstract

We characterize the Shapley value using (together with standard conditions of efficiency and equal gains in two-player games) a condition of ‘undominated merge-externalities’. Similar to the well-known ‘balanced contributions’ characterization, our characterization corresponds intuitively to ‘threat points’ present in bargaining. It derives from the observation that all semivalues satisfy ‘balanced merge-externalities’. Our characterization is applicable to useful, narrow sub-classes of games (including monotonic simple games), and also extends naturally to encompass games in partition function form.

Suggested Citation

  • McQuillin, Ben & Sugden, Robert, 2018. "Balanced externalities and the Shapley value," Games and Economic Behavior, Elsevier, vol. 108(C), pages 81-92.
  • Handle: RePEc:eee:gamebe:v:108:y:2018:i:c:p:81-92
    DOI: 10.1016/j.geb.2018.03.006
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    References listed on IDEAS

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    More about this item

    Keywords

    Shapley value; Balanced contributions; Merge-externalities; Semivalues; Coalitional bargaining;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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