The Proportional Ordinal Shapley Solution for Pure Exchange Economies

Chaoran Sun and David Pérez-Castrillo
Authors registered in the RePEc Author Service: David Perez-Castrillo

No 1274, Working Papers from Barcelona School of Economics

Abstract: We define the proportional ordinal Shapley (the POSh) solution, an ordinal concept for pure exchange economies in the spirit of the Shapley value. Our construction is inspired by Hart and Mas-Colell's (1989) characterization of the Shapley value with the aid of a potential function. The POSh exists and is unique and essentially single-valued for a fairly general class of economies. It satisfies individual rationality, anonymity, and properties similar to the null-player and null-player out properties in transferable utility games. The POSh is immune to agents' manipulation of their initial endowments: It is not D-manipulable and does not suffer from the transfer paradox. Moreover, we characterize the POSh through a Harsanyi's (1959) system of dividends and, when agents' preferences are homothetic, through a weighted balanced contributions property `a la Myerson (1980).

Keywords: shapley value; exchange economy; ordinal solution; potential (search for similar items in EconPapers)
JEL-codes: C72 D50 D63 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-des, nep-gth, nep-isf, nep-ore and nep-upt
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Journal Article: The proportional ordinal Shapley solution for pure exchange economies (2022)
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