An Application of the Shapley Value to Fair Division with Money

Herve Moulin

Econometrica, 1992, vol. 60, issue 6, 1331-49

Abstract: The author considers fair division when monetary compensations are feasible and utilities are quasi-linear. Four axioms are discussed: individual rationality, resource monotonicity, population solidarity, and the stand alone test. The latter views the utility from consuming all the goods as an upper bound on every coalition's actual (joint) utility. Under efficiency, the four axioms show little compatibility. However, when the goods have enough substitutability in everyone's preferences, the Shapley value of the surplus sharing game satisfies all four axioms. An example is the optimal assignment of indivisible goods when every agent consumes only one good. Copyright 1992 by The Econometric Society.

Date: 1992
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