Axiomatization and Implementation of Discounted Shapley Values

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    Abstract

    In this paper we introduce discounting in the bidding mechanism of Pérez-Castrillo and Wettstein (J Econ Theory 100:274–294, 2001) who implemented the Shapley value for cooperative transferable utility games. This modification of the mechanism yields the corresponding discounted Shapley value as the payoff distribution in every subgame perfect equilibrium. The class of discounted Shapley values contains the Shapley value and equal division solution as its extreme cases. Interestingly, we obtain axiomatizations of each solution in this class by generalizing the null player property (of the Shapley value) and nullifying player property (of the equal division solution) to the so-called δ-reducing player property.
    Original languageEnglish
    Pages (from-to)329-344
    JournalSocial Choice and Welfare
    Volume45
    Issue number2
    Early online date5 Jun 2015
    DOIs
    Publication statusPublished - 2015

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