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Balanced externalities and the Shapley value

Ben McQuillin () and Robert Sugden

Games and Economic Behavior, 2018, vol. 108, issue C, 81-92

Abstract: We characterize the Shapley value using (together with standard conditions of efficiency and equal gains in two-player games) a condition of ‘undominated merge-externalities’. Similar to the well-known ‘balanced contributions’ characterization, our characterization corresponds intuitively to ‘threat points’ present in bargaining. It derives from the observation that all semivalues satisfy ‘balanced merge-externalities’. Our characterization is applicable to useful, narrow sub-classes of games (including monotonic simple games), and also extends naturally to encompass games in partition function form.

Keywords: Shapley value; Balanced contributions; Merge-externalities; Semivalues; Coalitional bargaining (search for similar items in EconPapers)
JEL-codes: C71 C78 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:gamebe:v:108:y:2018:i:c:p:81-92