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The incentive core in co-investment problems

Author

Listed:
  • Josep Maria Izquierdo

    (Universitat de Barcelona)

  • Carlos Rafels

    (Universitat de Barcelona)

Abstract

We study resource-monotonicity properties of core allocations in co-investment problems: those where a set of agents pool their endowments of a certain resource or input in order to obtain a joint surplus or output that must be allocated among the agents. We analyze whether agents have incentives to raise their initial contribution (resource-monotonicity). We focus not only on looking for potential incentives to agents who raise their contributions, but also in not harming the payoffs to the rest of agents (strong monotonicity property). A necessary and sufficient condition to fulfill this property is stated and proved. We also provide a subclass of co-investment problems for which any core allocation satisfies the aforementioned strong resource-monotonicity property. Moreover, we introduce the subset of core allocations satisfying this condition, namely the incentive core.

Suggested Citation

  • Josep Maria Izquierdo & Carlos Rafels, 2017. "The incentive core in co-investment problems," UB School of Economics Working Papers 2017/369, University of Barcelona School of Economics.
    • Handle: RePEc:ewp:wpaper:369web
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    File URL: http://hdl.handle.net/2445/118810
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    References listed on IDEAS

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    More about this item

    Keywords

    Core; co-investment problems; proportional allocation; resourcemonotonicity.;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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