Aumann-Shapley Pricing: A Reconsideration of the Discrete Case

Yves SPRUMONT

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: We reconsider the following cost-sharing problem: agent i = 1,...,n demands a quantity xi of good i; the corresponding total cost C(x1,...,xn) must be shared among the n agents. The Aumann-Shapley prices (p1,...,pn) are given by the Shapley value of the game where each unit of each good is regarded as a distinct player. The Aumann-Shapley cost-sharing method assigns the cost share pixi to agent i. When goods come in indivisible units, we show that this method is characterized by the two standard axioms of Additivity and Dummy, and the property of No Merging or Splitting: agents never find it profitable to split or merge their demands.

Keywords: Cost sharing; Aumann-Shaey icing; merging; sitting (search for similar items in EconPapers)
JEL-codes: C71 D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: Written 2004

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