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.
All Science Journal Classification (ASJC) codes
- Sociology and Political Science
- Economics and Econometrics