Allocation of fixed costs and the weighted Shapley value

Pierre Dehez ()

No 2009035, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The weighted value was introduced by Shapley in 1953 as an asymmetric version of his value. Since then several approximations have been proposed including one by Shapley in 1981 specifically addressed to cost allocation, a context in which weights appear naturally. It was at the occasion of a comment in which he only stated the axioms. The present paper offers a proof of Shapley's statement as well as an alternative set of axioms. It is shown that the value is the unique rule that allocates additional fixed costs fairly: only the players who are concerned contribute to the fixed cost and they contribute in proportion to their weights. A particular attention is given to the case where some players are assigned a zero weight.

Keywords: cost allocation; Shapley value; fixed cost (search for similar items in EconPapers)
JEL-codes: C71 D46 (search for similar items in EconPapers)
Date: 2009-05-01
New Economics Papers: this item is included in nep-gth
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