Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85982 
Year of Publication: 
2003
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 03-076/1
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
Recently, applications of cooperative game theory to economicallocation problems have gained popularity. To understandthese applications better, economic theory studies thesimilarities and differences between them. The purpose of thispaper is to investigate a special class of cooperative gamesthat generalizes some recent economic applications with asimilar structure. These are so-called line-graph games beingcooperative TU-games in which the players are linearly ordered.Examples of situations that can be modeled like this aresequencing situations, water distribution situations andpolitical majority voting.The main question in cooperative game models of economicsituations is how to allocate the earnings of coalitions amongthe players. We apply the concept of Harsanyi solution toline-graph games. We define four properties that each selectsa unique Harsanyi solution from the class of all Harsanyisolutions. One of these solutions is the well-known Shapleyvalue which is widely applied in economic models. We applythese solutions to the economic situations mentioned above.
Subjects: 
TU-game
Harsanyi dividends
Shapley value
sharing system
Harsanyi solution
line-graph game.
JEL: 
C71
Document Type: 
Working Paper

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