Balanced externalities and the proportional allocation of nonseparable contributions

René van den Brink*, Youngsub Chun, Yukihiko Funaki, Zhengxing Zou

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper provides axiomatic characterizations of the proportional allocation of nonseparable contributions (PANSC) value for TU games, being the solution which allocates the total worth proportional to the separable contributions of the players. First, we show that the PANSC value is the only one satisfying efficiency and weak balanced externalities, the last axiom requiring that every player's payoff is the same fraction of the total externality inflicted on the other players with her presence. This is a weakening of balanced externalities studied in the context of queueing problems to characterize the Shapley value. Our second characterization is obtained by investigating the dual relation between the PANSC value and the proportional division value, showing that the PANSC value is the only one satisfying complement consistency and dual proportional standardness. In addition, we discuss the relation between the PANSC value and two methods widely used in cost allocation problems: the separable costs remaining benefits method and the alternative cost avoided method.

Original languageEnglish
JournalEuropean Journal of Operational Research
DOIs
Publication statusAccepted/In press - 2022

Keywords

  • Balanced externalities
  • Consistency
  • Cooperative game
  • Game theory
  • Proportional allocation of nonseparable contributions

ASJC Scopus subject areas

  • Computer Science(all)
  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management
  • Industrial and Manufacturing Engineering

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