A Characterization of Egalitarian and Proportional Sharing Principles: An Efficient Extension Operator Approach

Yukihiko Funaki, Yukio Koriyama and Satoshi Nakada

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Abstract: Some well-known solutions for cooperative games with transferable utility (TU-games), such as the Banzhaf value, the Myerson value, and the Aumann-Dreze value, fail to satisfy efficiency, although they possess other desirable properties. This paper proposes a new approach to restore efficiency by extending any underlying solution to an efficient one, through what we call an efficient extension operator. We consider novel axioms for an efficient extension operator and characterize the egalitarian surplus sharing method and the proportional sharing method in a unified manner. These results can be considered as new justifications for the f-ESS values and the f-PS values introduced by Funaki and Koriyama (2025), which are generalizations of the equal surplus sharing value and the proportional sharing value. Our results offer an additional rationale for the values with an arbitrary underlying solution. As applications, we develop an efficient-fair extension of the solutions for the TU-games with communication networks and its variant for TU-games with coalition structures.

Date: 2025-10
New Economics Papers: this item is included in nep-gth and nep-upt
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