A Strategic Implementation of the Shapley Value for the Nested Cost-Sharing Problem

Youngsub Chun, Cheng Cheng Hu, Chun Hsien Yeh

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

When agents have different needs for a public facility but serving a given agent allows serving all agents with smaller needs than his without any extra cost, how should the agents divide the cost of the facility among themselves? We provide a strategic implementation of the Shapley value for this class of cost-sharing problems. We introduce a three-stage extensive form game that respects individual rationality and show that there is one and only one subgame-perfect equilibrium outcome of the game. Moreover, it is the allocation assigned by the Shapley value.

Original languageEnglish
Pages (from-to)219-233
Number of pages15
JournalJournal of Public Economic Theory
Volume19
Issue number1
DOIs
Publication statusPublished - 2017 Feb 1

All Science Journal Classification (ASJC) codes

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics

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