Truth-telling and Nash equilibria in minimum cost spanning tree models

Jens Hougaard () and Mich Tvede

European Journal of Operational Research, 2012, vol. 222, issue 3, 566-570

Abstract: In this paper we consider the minimum cost spanning tree model. We assume that a central planner aims at implementing a minimum cost spanning tree not knowing the true link costs. The central planner sets up a game where agents announce link costs, a tree is chosen and costs are allocated according to the rules of the game. We characterize ways of allocating costs such that true announcements constitute Nash equilibria both in case of full and incomplete information. In particular, we find that the Shapley rule based on the irreducible cost matrix is consistent with truthful announcements while a series of other well-known rules (such as the Bird-rule, Serial Equal Split, and the Proportional rule) are not.

Keywords: Bayesian Nash equilibrium; Incomplete information; Minimum cost spanning tree; Shapley value; Nash equilibrium; Truth-telling (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:222:y:2012:i:3:p:566-570

DOI: 10.1016/j.ejor.2012.05.023

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