Some game-theoretic grounds for meeting people half-way

José M. Jiménez Gómez (), María del Carmen Marco Gil and Pedro Gadea Blanco
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José M. Jiménez Gómez: Universidad Politécnica de Cartagena
María del Carmen Marco Gil: Universidad Politécnica de Cartagena
Pedro Gadea Blanco: Universidad Politécnica de Cartagena
Authors registered in the RePEc Author Service: José-Manuel Giménez-Gómez ()

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: It is well known that, in distributions problems, "Fairness" rarely leads to a single viewpoint (see Young (1994) and Moulin (1988) among many others). This paper provides, in this context, interesting basis in defense of intermediate agreements when two prominent proposals, representing different sets of "Equity Principles", highlight a discrepancy in sharing resources. Specifically, we formalize such a conflicting situation by associating it with a "natural" cooperative game, called the Bifocal Distribution game, to show that both the Nucleolus, introduced by Schmeidler (1969), and the Shapley value, proposed by Shapley (1953), agree on recommending the "average of the two focal solutions". Finally, applying our analysis to bankruptcy problems, which have been analyzed extensively by Thomson (2003) and Moulin (2002), provides new "reasonable" solutions.

Keywords: distribution problems; bankruptcy; cooperative games; nucleolus; Shapley value; Lorenz criterion. (search for similar items in EconPapers)
JEL-codes: C71 D63 D71 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2010-03
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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