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Dividing profits three ways: Exactness vs. consensuality

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  • Boudreau, James W.
  • Knoblauch, Vicki

Abstract

A rule for 3-way division of profits based on peer evaluation reports is impartial if the calculation of each partner's share ignores her report, exact if it never allocates more or less than the profit to be shared, and consensual if it respects evaluations when the partners' reports are in agreement. We use a calculus of variations technique to solve exactly a simple version of the problem of finding a 3-way exact, impartial division function of minimal average deviation from consensuality. We also give approximate solutions to three versions of the problem using a numerical analysis technique that is widely applicable.

Suggested Citation

  • Boudreau, James W. & Knoblauch, Vicki, 2011. "Dividing profits three ways: Exactness vs. consensuality," Mathematical Social Sciences, Elsevier, vol. 62(2), pages 79-86, September.
    • Handle: RePEc:eee:matsoc:v:62:y:2011:i:2:p:79-86
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    References listed on IDEAS

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    1. de Clippel, Geoffroy & Moulin, Herve & Tideman, Nicolaus, 2008. "Impartial division of a dollar," Journal of Economic Theory, Elsevier, vol. 139(1), pages 176-191, March.
    2. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, vol. 45(3), pages 249-297, July.
    3. T. Tideman & Florenz Plassmann, 2008. "Paying the partners," Public Choice, Springer, vol. 136(1), pages 19-37, July.
    4. Knoblauch, Vicki, 2009. "Three-agent peer evaluation," Economics Letters, Elsevier, vol. 105(3), pages 312-314, December.
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    Cited by:

    1. Shiran Rachmilevitch, 2022. "Reasonable Nash demand games," Theory and Decision, Springer, vol. 93(2), pages 319-330, September.

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