The effect of choosing a proposer through a bidding procedure in implementing the Shapley value

Michela Chessa, Nobuyuki Hanaki, Aymeric Lardon and Takashi Yamada

Journal of Economic Psychology, 2022, vol. 93, issue C

Abstract: We experimentally compare simplified versions of two mechanisms that implement the Shapley value as an (ex ante) equilibrium outcome of a noncooperative bargaining procedure: one proposed by Hart and Mas-Colell (1996, H-MC) and the other by Perez-Castrillo and Wettstein (2001, PC-W). While H-MC induces the Shapley value only on average, PC-W does so as a unique equilibrium outcome by introducing an additional bidding stage on top of H-MC. We investigate the effect of this additional bidding stage on the resulting outcomes such as the frequency of grand coalition formation, efficiency, and the distance between the realized allocation and the Shapley value. Our experiment shows that H-MC not only results in significantly greater efficiency than PC-W, but also that the average allocation is closer to the Shapley value for those groups that formed the grand coalition. This difference is because those proposers who won the bidding stage in PC-W tend to offer an allocation that favors themselves more often, when compared to allocations proposed by randomly selected proposers in H-MC, and such offers are more likely to be rejected.

Keywords: Nash program; Bargaining procedures; Shapley value; Experiments (search for similar items in EconPapers)
JEL-codes: C70 C71 C92 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: The effect of choosing a proposer through a bidding procedure in implementing the Shapley value (2022)
Working Paper: The effect of choosing a proposer through a bidding procedure in implementing the Shapley value (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:93:y:2022:i:c:s0167487022000794

DOI: 10.1016/j.joep.2022.102568

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