Axiomatic and Strategic Justifications for Consistent Cost Allocation Rules
Date Issued
2012
Date
2012
Author(s)
Tsay, Min-Hung
Abstract
This dissertation consists of two parts that develop
axiomatic and strategic justifications for two consistent cost allocation rules, the constrained equal benefits (CEB) rule and the nucleolus, in the airport problem, which is concerned with sharing the cost of an airstrip among agents who need airstrips of different lengths. We justify these two cost allocation rules based on the two major kinds of consistency, Left-endpoint Subtraction (LS) bilateral consistency and Right-endpoint Subtraction (RS) bilateral consistency and converse consistency properties, LS converse consistency and RS converse consistency in the
airport problem, respectively. The first part of this dissertation investigates the implications of LS bilateral consistency and LS converse consistency in the airport problem. First, on the basis of the two properties, we characterize the constrained equal benefits rule, which equalizes agents'' benefits subject to no one receiving a subsidy. Second, we introduce a 2-stage extensive
form game that exploits LS bilateral consistency and
LS converse consistency. We show that there is a unique
subgame perfect equilibrium outcome of the game and moreover, it is the allocation chosen by the constrained equal benefits rule. In the second part of the dissetation, we address whether different formulations of consistency and converse consistency axioms provide strategic justifications for different rules. First, we propose
RS bilateral consistency and RS converse consistency in the airport problem, and find that the nucleolus, which lexicographically maximizes the welfare of the worst-off coalitions, satisfies the two properties. We then introduce a 3-stage extensive form game to implement the nucleolus that exploits the properties. As we show, there is a unique subgame perfect equilibrium outcome of the game and moreover, it is the allocation chosen by the nucleolus.
This result together with which given in the first part of this dissertation provides a positive answer to the question.
Subjects
Cost sharing problems
public goods problems
airport problems
nucleolus
constrained equal benefits rule
axiomization
noncooperative games
reduced games
consistency
converse consistency
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
index.html
Size
23.27 KB
Format
HTML
Checksum
(MD5):bbc81129526461a99cbb52ec0ad2ac94