Equitable Solutions in Game Representations and the Shapley Value

Pradeep Dubey

Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: We show that any transferable utility game can be represented by an assignment of costly facilities to players, in which it is intuitively obvious how to allocate the total cost of all facilities amongst the players in an equitable manner. The equitable solution in the representation turns out to be the Shapley value of the game, and thus serves as an alternative justification of the value. We show that this approach extends also to the case when not all coalitions can form, provided those that can constitute a semi-algebra of sets (i.e., contain the grand coalition, and are closed under complements).

Date: 2018
New Economics Papers: this item is included in nep-gth and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:nys:sunysb:18-11

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