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Strong monotonicity in surplus sharing

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  • Eric Friedman

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Abstract

We consider three new axioms for surplus sharing problems. The first is strong monotonicity which says that workers should be rewarded for increases in productivity and the second says that productive workers should receive some compensation. The third requires that the surplus sharing rule should be well defined (and continuous on) the set of threshold functions. We show that none of the standard "equitable" mechanisms satisfy any of these axioms and then present a constructive characterization of mechanisms which do. Using this we construct several new mechanisms. These are the Almost Flat mechanism, the Spread Aumann-Shapley mechanism, and the Spread Serial mechanism, which have many desirable properties. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Eric Friedman, 2004. "Strong monotonicity in surplus sharing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 643-658, March.
  • Handle: RePEc:spr:joecth:v:23:y:2004:i:3:p:643-658
    DOI: 10.1007/s00199-003-0377-0
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    Citations

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    Cited by:

    1. Leroux, Justin, 2005. "Strategyproof Profit Sharing: A Two-Agent Characterization," Working Papers 2005-04, Rice University, Department of Economics.
    2. Leroux, Justin, 2008. "Profit sharing in unique Nash equilibrium: Characterization in the two-agent case," Games and Economic Behavior, Elsevier, vol. 62(2), pages 558-572, March.
    3. Qiaohai (Joice) Hu & Leroy B. Schwarz & Nelson A. Uhan, 2012. "The Impact of Group Purchasing Organizations on Healthcare-Product Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 14(1), pages 7-23, January.
    4. Justin Leroux, 2007. "Cooperative production under diminishing marginal returns: interpreting fixed-path methods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(1), pages 35-53, July.

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