Backward Induction Foundations of the Shapley Value. Issue 6 (9th November 2016)

• Record Type: Journal Article
• Authors: McQuillin, Ben; Sugden, Robert
• Is Part Of: Econometrica. Volume 84:Issue 6(2016:Nov.)
• Page Start: 2265
• Page End: 2280
• Publication Date: 2016-11-09
• Subjects: Shapley value -- Nash program -- noncooperative coalitional bargaining; Econometrics -- Periodicals; Economics, Mathematical -- Periodicals; Economics -- Periodicals; Économétrie -- Périodiques; Mathématiques économiques -- Périodiques; Économie politique -- Périodiques; 330.05
• DOI: 10.3982/ECTA13191
• Languages: English
• ISSNs: 0012-9682

Abstract

Abstract : We present a noncooperative game model of coalitional bargaining, closely based on that of Gul (1989) but solvable by backward induction. In this game, Gul's condition of "value additivity" does not suffice to ensure the existence of a subgame perfect Nash equilibrium that supports the Shapley value, but a related condition—"no positive value‐externalities"—does. Multiple equilibria can arise only in the event of ties, and with a mild restriction on tie‐break rules these equilibria all support the Shapley value.