A game theoretical approach to sharing penalties and rewards in projects

Arantza Estévez-Fernández
Authors registered in the RePEc Author Service: Arantza Estévez Fernández

European Journal of Operational Research, 2012, vol. 216, issue 3, 647-657

Abstract: This paper analyzes situations in which a project consisting of several activities is not realized according to plan. If the project is expedited, a reward arises. Analogously, a penalty arises if the project is delayed. This paper considers the case of arbitrary nondecreasing reward and penalty functions on the total expedition and delay, respectively. Attention is focused on how to divide the total reward (penalty) among the activities: the core of a corresponding cooperative project game determines a set of stable allocations of the total reward (penalty). In the definition of project games, surplus (cost) sharing mechanisms are used to take into account the specific characteristics of the reward (penalty) function at hand. It turns out that project games are related to bankruptcy and taxation games. This relation allows us to establish nonemptiness of the core of project games.

Keywords: Game theory; Project management; Delay and expedition; Cost and surplus sharing mechanism; Bankruptcy and taxation problems (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:216:y:2012:i:3:p:647-657

DOI: 10.1016/j.ejor.2011.08.015

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