Deriving Egalitarian and Proportional Principles from Individual Monotonicity

Yukihiko Funaki and Yukio Koriyama
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Yukihiko Funaki: School of Political Science and Economics, Waseda University

No 2413, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: The problem of efficient allocation of the grand coalition worth in transferableutility games boils down to specifying how the surplus is distributed among individuals, in the situation where the individual share is well-defined. We show that the Individual Monotonicity axiom for Equal Surplus, together with Efficiency and Equal Treatment, implies Egalitarian Surplus Sharing, while the same axiom for Equal Ratio implies Proportional Division. The results thus illustrate the common structure in deriving two principles of surplus distribution, egalitarian and proportional, from the Individual Monotonicity axioms. We further show that relaxation of Equal Treatment leads to Weighted Surplus Sharing and Shifted Proportional Division, highlighting the common structure in which Individual Monotonicity characterizes the allocations that can incorporate social objectives of a redistributive nature.

Keywords: TU-games; monotonicity; egalitarian surplus sharing; proportional division; redistribution (search for similar items in EconPapers)
Pages: 29 pages
Date: 2025-01
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