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Cost Allocation as Cooperative Games

In: An Introduction to Allocation Rules

Author

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  • Jens Leth Hougaard

    (University of Copenhagen)

Abstract

There is a wide range of situations where a group of agents (broadly interpreted as persons, departments, organizations or countries) benefit from cooperative actions, but is left with the problem of sharing the related costs. These situations range from everyday life problems such as people sharing a cab to international agreements like the Kyoto protocol where industrialized countries bargain over emission cuts. In everyday situations, like sharing a cab, there are rarely time to make use of sophisticated allocation rules even though the problem itself may be rather complex: typically the allocation becomes more or less random and people often tend to use rules of thumb.In situations like bargaining between countries over emission cuts, the final outcome will typically reflect the countries bargaining power rather than sophisticated considerations of fairness

Suggested Citation

  • Jens Leth Hougaard, 2009. "Cost Allocation as Cooperative Games," Springer Books, in: An Introduction to Allocation Rules, chapter 3, pages 61-96, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-01828-2_3
    DOI: 10.1007/978-3-642-01828-2_3
    as

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