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A game theoretical approach to sharing penalties and rewards in projects

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  • Estévez-Fernández, Arantza

Abstract

This paper analyzes situations in which a project consisting of several activities is not realized according to plan. If the project is expedited, a reward arises. Analogously, a penalty arises if the project is delayed. This paper considers the case of arbitrary nondecreasing reward and penalty functions on the total expedition and delay, respectively. Attention is focused on how to divide the total reward (penalty) among the activities: the core of a corresponding cooperative project game determines a set of stable allocations of the total reward (penalty). In the definition of project games, surplus (cost) sharing mechanisms are used to take into account the specific characteristics of the reward (penalty) function at hand. It turns out that project games are related to bankruptcy and taxation games. This relation allows us to establish nonemptiness of the core of project games.

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  • Estévez-Fernández, Arantza, 2012. "A game theoretical approach to sharing penalties and rewards in projects," European Journal of Operational Research, Elsevier, vol. 216(3), pages 647-657.
    • Handle: RePEc:eee:ejores:v:216:y:2012:i:3:p:647-657
    DOI: 10.1016/j.ejor.2011.08.015
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      • Estevez Fernandez, M.A. & Borm, P.E.M. & Hamers, H.J.M., 2005. "Project Games," Discussion Paper 2005-91, Tilburg University, Center for Economic Research.
      • Estevez Fernandez, M.A. & Borm, P.E.M. & Hamers, H.J.M., 2007. "Project games," Other publications TiSEM 809ba203-2bd2-48ce-ae6d-b, Tilburg University, School of Economics and Management.
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    Cited by:

    1. Bergantiños, Gustavo & Martínez, Ricardo, 2014. "Cost allocation in asymmetric trees," European Journal of Operational Research, Elsevier, vol. 237(3), pages 975-987.
    2. Sanjiv Kumar & Ritika Chopra & Ratnesh R. Saxena, 2016. "A Fast Approach to Solve Matrix Games with Payoffs of Trapezoidal Fuzzy Numbers," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 33(06), pages 1-14, December.

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    More about this item

    Keywords

    Game theory; Project management; Delay and expedition; Cost and surplus sharing mechanism; Bankruptcy and taxation problems;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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