Core Allocations in Co-investment Problems

Josep Maria Izquierdo () and Carlos Rafels ()
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Josep Maria Izquierdo: University of Barcelona
Carlos Rafels: University of Barcelona

Group Decision and Negotiation, 2020, vol. 29, issue 6, No 7, 1157-1180

Abstract: Abstract In a theoretical co-investment problem, a set of agents face a surplus-sharing situation with a single input and a single output exhibiting increasing average returns. All agents contribute their respective inputs and expect part of the collective output. Focusing on the core of the problem, we analyze whether a core allocation of the output is acceptable or compatible with a variation of input contributions, where larger payoffs are expected by those agents whose contribution has increased. We state a necessary and sufficient condition for a core allocation to be acceptable. We also introduce and study the acceptable core, that is, those core allocations acceptable for any possible increase of inputs. Finally, we axiomatically characterize when a set-solution that contains acceptable core allocations shrinks into the proportional allocation.

Keywords: Co-investment; Increasing average returns; Proportional solution; Incentive monotonicity; Acceptable core allocations (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10726-020-09700-3

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