The incentive core in co-investment problems

Josep Maria Izquierdo () and Carlos Rafels ()
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Josep Maria Izquierdo: Universitat de Barcelona
Carlos Rafels: Universitat de Barcelona

No 2017/369, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: We study resource-monotonicity properties of core allocations in co-investment problems: those where a set of agents pool their endowments of a certain resource or input in order to obtain a joint surplus or output that must be allocated among the agents. We analyze whether agents have incentives to raise their initial contribution (resource-monotonicity). We focus not only on looking for potential incentives to agents who raise their contributions, but also in not harming the payoffs to the rest of agents (strong monotonicity property). A necessary and sufficient condition to fulfill this property is stated and proved. We also provide a subclass of co-investment problems for which any core allocation satisfies the aforementioned strong resource-monotonicity property. Moreover, we introduce the subset of core allocations satisfying this condition, namely the incentive core.

Keywords: Core; co-investment problems; proportional allocation; resourcemonotonicity. (search for similar items in EconPapers)
JEL-codes: C71 D63 D70 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2017
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