Balanced Externalities and the Proportional Allocation of Nonseparable Contributions
Rene van den Brink,
Youngsub Chun,
Yukihiko Funaki () and
Zhengxing Zou
Additional contact information
Rene van den Brink: Vrije Universiteit Amsterdam
No 21-024/II, Tinbergen Institute Discussion Papers from Tinbergen Institute
Abstract:
In this paper, we study the implications of extending the balanced cost reduction property from queueing problems to general games. As a direct translation of the balanced cost reduction property, the axiom of balanced externalities for solutions of games, requires that the payoff of any player is equal to the total externality she inflicts on the other players with her presence. We show that this axiom and efficiency together characterize the Shapley value for 2-additive games. However, extending this axiom in a straightfoward way to general games is incompatible with efficiency. Keeping as close as possible to the idea behind balanced externalities, we weaken this axiom by requiring that every player's payoff is the same fraction of its total externality inflicted on the other players. This weakening, which we call weak balanced externalities, turns out to be compatible with efficiency. More specifically, the unique efficient solution that satisfies this weaker property is the proportional allocation of nonseparable contribution (PANSC) value, which allocates the total worth proportional to the separable costs of the players. We also provide characterizations of the PANSC value using a reduced game consistency axiom.
Keywords: Cooperative game; balanced externalities; proportional allocation of nonseparable contributions; consistency (search for similar items in EconPapers)
JEL-codes: C71 (search for similar items in EconPapers)
Date: 2021-03-18
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://papers.tinbergen.nl/21024.pdf (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20210024
Access Statistics for this paper
More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().