An efficient and almost budget balanced cost sharing method

Moulin, H. (2010) An efficient and almost budget balanced cost sharing method. Games and Economic Behavior, 70(1), pp. 107-131. (doi: 10.1016/j.geb.2008.09.028)

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For a convex technology C we characterize cost sharing games where the Nash equilibrium demands maximize total surplus. Budget balance is possible if and only if C is polynomial of degree n−1n−1 or less. For general C, the residual* cost shares are balanced if at least one demand is null, a characteristic property. If the cost function is totally monotone, a null demand receives cash and total payments may exceed actual cost. The ratio of excess payment to efficient surplus is at most View the MathML sourcemin{2logn,1}. For power cost functions, C(a)=apC(a)=ap, p>1p>1, the ratio of budget imbalance to efficient surplus vanishes as View the MathML source1np−1. For analytic cost functions, the ratio converges to zero exponentially along a given sequence of users. All asymptotic properties are lost if the cost function is not smooth.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Moulin, Professor Herve
Authors: Moulin, H.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Games and Economic Behavior

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