truth telling and nash equilibria in minimum cost spanning tree models abstract in this paper we consider the minimum cost spanning tree model we assume that a central planner aims at implementing a minimum cost spanning tree not knowing the true link costs the central planner sets up a game where agents announce link costs a tree is chosen and costs are allocated according to the rules of the game we characterize ways of allocating costs such that true announcements constitute nash equilibria both in case of full and incomplete information in particular we find that the shapley rule based on the irreducible cost matrix is consistent with truthful announcements while a series of other well known rules such as the bird rule serial equal split and the proportional rule are not

ethical strategy focus and mutual fund management performance and persistence abstract the aim of this study is to analyze whether managers practitioners and individual investors could obtain higher risk adjusted returns by allocating their investments to funds that integrate specific levels of socially responsible sr criteria in their portfolios this is achieved by comparing the performance of mutual funds according to their sr characteristics environmental governance social and sustainability attributes for a large sample of 3920 equity sr mutual funds around the world performance is measured using a multifactor model that incorporates relevant benchmarks according to the fund investment objectives and using carhart s 1997 methodology to measure mutual fund performance persistence in general fund performance is not significant the average being negative and close to zero funds achieving relatively high levels of sr attributes in their portfolios seem to experience overall worse performances this evidence is however mainly driven by the behavior of worst performing funds moreover investing in the previous best sr funds could lead investors to greater overall returns in most areas and levels of sr attributes considered this evidence highlights the role of managers in enhancing the returns of a portfolio with a well defined sr investment policy therefore there is no incompatibility between pursuing higher ethical and sustainable values as well as greater financial performances from investments provided managers have the skills necessary to choose the right sr funds

cooperative outcomes through noncooperative games abstract this paper shows the equivalence between the stable solution set of any cooperative game in characteristic form g1 and the subgame perfect nash equilibria in pure strategies of a certain noncooperative game g2 players of g1 are named agents g2 is played by different players principals who compete in wages to attract agents the equivalence result holds when there are enough principals if the game is superadditive two principals suffice finally another related cooperative game g3 is constructed with both principals and agents as players for g2 and g3 the same result is then proven for any number of principals journal of economic literature classification numbers c71 and c72

corporate social responsibility and socially responsible investing a global perspective this research examines the relationship between corporate social responsibility csr and company stock valuation across three regions of the world after a brief introduction the article gives an overview of the evolving definition of csr as well as a discussion of the ways in which this construct has been operationalized presentation of the potential impact of corporate social performance on firm financial performance follows including investor characteristics the rationale behind their choices and their influence on the marketplace for securities worldwide the unique method used to select socially responsible investments is then provided that also includes a description of the quantitative techniques employed in the analyses results are offered subsequently and the close describes implications for global enterprises as socially responsible investments

determinants of pension plan fees in spain pension plans and funds represent a substantial part of the welfare systems in both europe and spain one of the most important factors in the choice of a plan or fund is the performance it obtains in view of the influence that fees have on performance the objective of this study is to analyse the variables that determine the management and custodial fees of individual pension plans the spanish market for pension plans and funds sets legal caps on these fees and at the same time the majority of them are commercialized and managed by financial institutions which can in turn generate a conflict of interests in this article we estimate models with censured variables and our findings show how the average investment per plan the legal status and the size of the management company to which the plan belongs and the style of the plan are all relevant determinants of the management fee in turn the custodial fee is determined by the legal status of the custodial company the size the return and the type

how not to sell nuclear weapons we consider situations where a sale affects the ensuing interaction between potential buyers these situations are modeled by assuming that an agent who does not acquire the object for sale incurs an identity dependent externality we construct a revenue maximizing auction for the seller we observe that 1 outside options and participation constraints are endogenous 2 the seller extracts surplus also from agents who do not obtain the auctioned object 3 the seller is better off by not selling at all while obtaining some payments if externalities are much larger than valuations

pollution claim settlements under private information abstract the classical problem of resolving a nuisance dispute between a pollution generating firm and nearby residents is modelled here as a mechanism design problem we assume that the designer of the mechanism is the firm that it is uncertain about the actual losses suffered by residents and that the initial assignment of property rights is one where each resident is entitled to prevail we derive a profitmaximizing scheme under the individual rationality and incentive compatibility constraints and examine its properties it is shown that the outcomes it yields are sometimes inefficient moreover when many residents are affected by pollution and the degree of uncertainty with respect to the losses they suffer is large these inefficiencies become rampant

bargaining foundations of shapley value1 a transferable utility economy in which each agent holds a resource which can be used in combination with the resources of other agents to generate value according to the characteristic function v is studied using a dynamic model of bargaining the main theorem establishes that the payoffs associated with efficient equilibria converge to the agents shapley values as the time between periods of the dynamic game goes to zero in addition it is demonstrated that an efficient equilibrium exists and is unique when an additivity condition is satisfied to demonstrate the sensitivity of the solution to the institutional detail we modify the model to allow for partnerships and show that the shapley value is no longer achieved

bargaining and value we present and analyze a model of noncooperative bargaining among n participants applied to situations describable as games in coalitional form this leads to a unified solution theory for such games that has as special cases the shapley value in the transferable utility tu case the nash bargaining solution in the pure bargaining case and the recently introduced maschler owen consistent value in the general nontransferable utility ntu case moreover we show that any variation in a certain class of our bargaining procedure which generates the shapley value in the tu setup must yield the consistent value in the general ntu setup

forming coalitions and the shapley ntu value a simple protocol for coalition formation is presented first an order of the players is randomly chosen then a coalition grows by sequentially incorporating new members in this order the protocol is studied in the context of non transferable utility ntu games in characteristic function form if weighted utility transfers are feasible when everybody cooperates then the expected subgame perfect equilibrium payoff allocation anticipated before any implemented game is the shapley ntu value

can socially responsible investment for cleaner production improve the financial performance of spanish pension plans abstract assets under management involved in socially responsible investing almost trebled from 2007 to 2011 in europe led by pension funds such growth has encouraged the implementation of socially responsible activities by companies which have improved their cleaner production methods in order to reduce greenhouse gas emissions total water used energy consumption and waste generated among others integrating environmental social and governance policies for cleaner production into the investment strategy of pension plans could increase their cost deriving from the screening process and or increase the benefits because socially responsible companies in which pension funds invest might achieve a better financial performance than traditional companies which could in turn affect pension plans financial performance for this reason the aim of this paper is two fold firstly to examine the financial performance of spanish pension plans compared to market benchmarks taking into account the category to which they belong and the socially responsible business strategy implemented by the manager and secondly to analyze whether differences in financial performance exist between solidarity pension plans ethical pension plans and traditional pension plans to do this we have a sample of 651 individual system pension plans using these sample data we implement the robust random effects panel data methodology the results show that ethical pension plans which invest in companies that improve their cleaner production methods achieve a similar financial performance to conventional pension plans while solidarity pension plans significantly outperform conventional pension plans

siting noxious facilities are markets efficient abstract this paper explores the economics and politics of the siting of noxious facilities in the base case facilities are sited by markets subject to majority agreement in the host jurisdiction by contrast with the existing market siting literature which assumes that all the disamenities of a facility will be contained in the host jurisdiction and fully reflected in the jurisdiction s willingness to accept here facilities impose disamenities on individuals as a function of distance and the process of majority agreement is explicitly modeled the principal finding is that when voters are uniformly distributed within a jurisdiction an individual who is median distance from a facility suffers less than average mean disamenity therefore a majority would be willing to serve as facility host for a price host fee that is strictly less than the aggregate disamenity that the facility imposes on the jurisdiction further by threatening the equilibrium host with a site just across its border a firm can induce majority acceptance of a nontrivial facility at zero host fee even when this threat site strategy is infeasible though market determined host fees will not signal efficient sites thus markets will produce an excessive number of noxious facilities and place them in the wrong sites these results are robust to alternative specifications of bargaining power and market structure if however host majority agreement is subject to the veto of a higher jurisdiction e g in response to cries of nimby then efficiency may be either improved or reduced

remittances financial development and growth abstract despite the increasing importance of remittances in total international capital flows the relationship between remittances and growth has not been adequately studied this paper studies one of the links between remittances and growth in particular how local financial sector development influences a country s capacity to take advantage of remittances using a newly constructed dataset for remittances covering about 100 developing countries we find that remittances boost growth in countries with less developed financial systems by providing an alternative way to finance investment and helping overcome liquidity constraints this finding controls for the endogeneity of remittances and financial development does not depend on the particular measure of financial sector development used and is robust to a number of robustness tests including threshold estimation we also provide evidence that there could be an investment channel trough which remittances can promote growth especially when the financial sector does not meet the credit needs of the population

choosing and sharing implementing a project like a nationwide nuclear waste disposal which benefits all involved agents but brings major costs only to the host is often problematic in practice revelation issues and redistributional concerns are significant obstacles to achieving stable agreements we address these issues by proposing the first mechanism to implement the efficient site the host with the lowest cost and share the exact cost while retaining total control over realized transfers our mechanism is simple and in the vein of the well known divide and choose procedure the unique nash equilibrium outcome of our mechanism coincides with truthtelling is budget balanced individually rational and immune to coalitional deviations more generally our mechanism can also handle the symmetric case of positive local externalities e g olympic games and even more complex situations where the usefulness of the project regardless of its location is not unanimous

the performance of us and european green funds in different market conditions abstract the effects of incorporating environmental criteria in investment decisions is of upmost importance to an increasing number of investors this paper evaluates the performance of us and european green funds that invest globally by using conditional models that consider both time varying performance and risk measures the results show that green funds tend to underperform the benchmark particularly european funds fund underperformance is mainly concentrated in times when short term interest rates are lower than normal and in non crisis periods also the performance of green funds is higher in crisis periods compared to non crisis periods furthermore although at the aggregate level green funds that are certified with a sri label perform similarly to green funds without a label there are less certified funds presenting negative performance compared to non certified funds us green funds perform better than other socially responsible funds in times of crisis whereas european green funds match their performance in crisis periods but underperform them in non crisis periods overall the results support the importance of using conditional models in evaluating fund performance

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive

shareholder value stakeholder management and social issues what s the bottom line we test the relationship between shareholder value stakeholder management and social issue participation building better relations with primary stakeholders like employees customers suppliers and communities could lead to increased shareholder wealth by helping firms develop intangible valuable assets which can be sources of competitive advantage on the other hand using corporate resources for social issues not related to primary stakeholders may not create value for shareholders we test these propositions with data from s p 500 firms and find evidence that stakeholder management leads to improved shareholder value while social issue participation is negatively associated with shareholder value copyright 2001 john wiley sons ltd

a sealed bid auction mechanism for siting noxious facilities this paper proposes a sealed bid mechanism for facilitating the siting process of noxious facilities such as prisons trash disposal plants and incinerators for hazardous waste these facilities have created such opposition by communities that the acronyms nimby not in my backyard or lulu local undesirable land use are now in common usage to describe the public s reaction to them the noxious facility siting problem arises because there are economies of scale associated with having only one plant to serve the needs of a wide region the community that hosts the plant absorbs all of the environmental costs while the rest of the region enjoys the benefits of the facility one reason that these facilities have been so strongly opposed by communities is that they generate relatively little new employment and provide limited additional taxes in relation to their perceived negative impact d morell and c magorian 1982 some compensation arrangement is thus needed to share the gains from the winners to the potential loser this paper discusses a sealed bid auction mechanism for selecting a location for the facility so that all communities feel they are better off than under the status quo

bidding for the surplus a non cooperative approach to the shapley value abstract we propose a simple mechanism to determine how the surplus generated by cooperation is to be shared in zero monotonic environments with transferable utility the mechanism consists of a bidding stage followed by a proposal stage we show that the subgame perfect equilibrium outcomes of this mechanism coincide with the vector of the shapley value payoffs we extend our results to implement the weighted shapley values finally we generalize our mechanism to handle arbitrary transferable utility environments the modified mechanism generates an efficient coalition structure and implements the shapley values of the super additive cover of the environment journal of economic literature classification numbers c71 c72

choosing wisely a multibidding approach reaching decisions about the location of noxious facilities such as dump sites environmentally hazardous plants nuclear power generators and the like is a highly contentious issue for instance in february 2000 the u s senate decided that nationwide nuclear waste would be shipped to the yucca mountain site in nevada conditional to it being approved as a high level nuclear waste repository despite the attractive compensation package the state of nevada voiced vehement opposition president clinton vetoed the bill and in may 2000 the senate failed to overturn it as such the major problem facing the u s nuclear industry on where to site a high level radioactive waste repository remains virtually unresolved neither are decisions about the location of desirable events easily solvable every two years the international olympic committee selects hosts for the summer and winter games a procedure that is constantly under review and revision in order to bring about the best possible outcome until about a year ago the decision was made by a vote based on bids and plans submitted by candidate cities however the recent controversy surrounding the choice of salt lake city to host the 2002 winter games culminated in the design of a new procedure for choosing the host of the 2006 winter games this procedure called for the selection of two finalist cities in this case turin and sion immediately after which the host was selected by secret ballot in this case turin another similar issue is currently the subject of heated debate in spain the spanish government both on the national and local level has recently been discussing various possible projects for transferring water from rivers in the north of spain to the arid southern regions the parties involved have conflicting interests with regard to several aspects of the projects proposed particularly the water rich regions are hesitant to give up parts of their water resources the parties involved have still not agreed upon the choice of a transport mode or the size of the transfer payments that would compensate the localities that are relinquishing part of the water supply these and several other cases belong to a class of problems in which a group of agents has to choose one out of several projects a project is efficient if it maximizes the aggregate welfare of the group members reaching an efficient outcome is trivial when the designer has all the relevant information however it is often the case that the parties concerned possess much more information than the designer hence the designer faces a nontrivial problem if she wishes to optimally choose one of the projects moreover from a normative point of view even if the designer has all the information it is easier to justify the use of a fixed procedure to reach a decision than to modify the procedure for various cases in light of information disclosed or already available to the designer several well known methods are available for the problem of choosing one out of a set of alternatives one class of methods consists of various voting schemes such as majority voting or the borda rule the outcomes generated by these methods need not be efficient due to strategic behavior on the part of the agents another class of methods consists of vickreyclarke groves mechanisms for this class truthtelling is a dominant strategy that always results in the choice of an efficient alternative however these mechanisms are not budgetbalanced and the payments collected from the perez castrillo department of economics code universitat autonoma de barcelona 08193 bellatera barcelona spain wettstein department of economics bengurion university of the negev monaster center for economic research beer sheva 84105 israel we thank herve moulin for his helpful suggestions suresh mutuswami who encouraged us to check for strong nash equilibria and francis bloch mark gradstein moshe justman jordi masso and two anonymous referees for their useful comments perez castrillo gratefully acknowledges financial support from bec2000 0172 and 2000sgr 00054

forming efficient networks abstract we suggest a simple sequential mechanism whose subgame perfect equilibria give rise to efficient networks moreover the payoffs received by the agents coincide with their shapley value in an appropriately defined cooperative game

a solution concept for network games the role of multilateral interactions abstract we propose an allocation rule that takes into account the importance of both players and their links and characterize it for a fixed network our characterization is along the lines of the characterization of the position value for network games by van den nouweland and slikker 2012 the allocation rule so defined admits multilateral interactions among the players through their links which distinguishes it from the other existing rules next we extend our allocation rule to flexible networks a la jackson 2005

coalition formation and bargaining protocols a review of the literature this paper offers a review of the vast literature regarding bargaining and coalition formation this topic has been generally described as the attempt to provide strategic foundations to cooperative solution concepts it can therefore be seen as the linking ring between the non cooperative and the cooperative game theoretic approach to coalition formation its central role in economic theory and its relatively long history that goes back to the nash program have fostered a large academic production including surveys nonetheless this paper will focus on an aspect that is often neglected in the dedicated surveys the specificities of the bargaining protocols leading to different outcomes although generally downgraded to the rank of details the differences in bargaining protocols even when minor can cause significant changes in fundamental aspects such as the possibility to reach full cooperation the distribution of final pay offs and the time taken to reach an agreement focused on externalities free games therefore on bargaining protocols sustaining solution concepts for cooperative games in characteristic function form the paper aims at providing a brief but exhaustive review of the topic that could result in a very useful tool for any researcher approaching the subject of coalitional bargaining

choosing a common project experimental evidence on the multibidding mechanism abstract perez castrillo d wettstein d 2002 choosing wisely a multibidding approach american economic review 5 1577 1587 and veszteg r f 2004 multibidding game under uncertainty working paper 14 04 universidad de navarra propose the use of a multibidding mechanism for situations where agents have to choose a common project examples are decisions involving public goods or public bads we report experimental results that test the practical tractability and effectiveness of multibidding mechanisms in environments where agents hold private information concerning their valuation of the projects the mechanism performed quite well in the laboratory providing the ex post efficient outcome in roughly three quarters of the cases across the treatments moreover the largest part of the subject pool formed their bids according to theoretical bidding behavior

motivations to remit evidence from botswana in this article a theory of motivations to send remittances is described and tested with data from botswana altruism is one of the motivations tested and found to be an insufficient explanation for remittances among migrants in botswana a refinement of the model stipulates a modified altruism or enlightened self interest in this model the relationship between the migrant and family is tempered by an implicit understanding of mutual benefit the household strategy may be to encourage some members to migrate as a means of spreading risk and sharing gains the household strategy is similar to an insurance policy where migration is to places where market potential is high the risks incurred might be high the example is given of migration during a drought in botswana migrant remittances were greater in households with more cattle or households with more to lose drought alone was not statistically related to remittances increases in remittances were related to increased levels of education it is suggested that repayment was the motive for parents investment in migrants education migrants gains are identified as the potential for an inheritance the security of channeling investments through a trusted family member and security in having a home to return to it is pointed out that the altruism and family remittances from urban migration were strategies that bridged the simple dynamic of either urban development or rural development impacting on family welfare it is suggested that household models of economy adopt some measure to express the relationship of household wealth to remittances from urban migrants

a solution to the problem of externalities when agents are well informed the author describes a class of simple two stage mechanisms that implement efficient allocations as subgame perfect equilibria for economic environments involving externalities these mechanisms known as compensation mechanisms solve a wide variety of externalities problems including implementation of lindahl allocations regulation of monopoly and efficient solutions to the prisoner s dilemma copyright 1994 by american economic association

efficient allocation of a prize king solomon s dilemma abstract a planner is interested in allocating an indivisible good a prize to one of many agents in the economy his objective is to give the prize to the agent who values it most without any payments being made by the recipient the planner however does not know the identity of this agent while the agents themselves do this paper shows how the planner can construct simple multistage mechanisms with a unique subgame perfect equilibrium outcome at this outcome the agent who values the prize most gets it without any transfer of money being made by any of the agents or the planner

coalitional bargaining with competition to make offers abstract the paper analyzes a simple discrete time noncooperative coalitional bargaining game in which at each stage there is a contest for the right to make a proposal the pure stationary subgame perfect equilibrium payoff set is equal to the core journal of economic literature classification numbers 026

implementation of bargaining sets via simple mechanisms abstract we propose two simple mechanisms that implement two bargaining sets in super additive environments the first bargaining set is a close variation of the one proposed by l zhou 1994 games econom behav 6 512 526 and the second is the pareto optimum payoffs of the a mas colell 1989 j math econom 18 129 139 bargaining set we adopt a simple framework in which the cooperative outcomes are realized as non cooperative subgame perfect equilibria in pure strategies of a two stage game played by an auxiliary set of individuals competing over the cooperative agents journal of economic literature classification numbers c71 c72

remittances transaction costs and informality abstract recorded workers remittances to developing countries reached 167 billion in 2005 bringing increasing attention to these flows as a potential tool for development in this paper we explore the determinants of remittances and their associated transaction costs we find that recorded remittances depend positively on the stock of migrants and negatively on transfer costs and exchange rate restrictions in turn transfer costs are lower when financial systems are more developed and exchange rates less volatile the negative impact of transactions costs on remittances suggests that migrants either refrain from sending money home or else remit through informal channels when costs are high we provide evidence from household surveys supportive of a sizeable informal sector

value consistency and random coalition formation abstract given an n player cooperative game and a feasible age n vector suppose that the players in a cooperative game are randomly split into two coalitions each with a randomly chosen leader the two leaders bargain bilaterally and each pays out of his share a wage to each member of his coalition as specified by the wage vector the wage vector is said to be consistent with the above procedure if it is equal to the ex ante expected payoff vector we prove that if all 2 coalition partitions are equally likely and if the bilateral bargain splits the surplus equally then the unique consistent payoff vector is the shapley value an equivalent consistency result holds for partitions with more than two elements these results are related to gul s 1989 result on noncooperative implementation of the shapley value journal of economic literature classification number 026

realizing fair outcomes in minimum cost spanning tree problems through non cooperative mechanisms abstract in the context of minimum cost spanning tree problems we present a bargaining mechanism for connecting all agents to the source and dividing the cost among them the basic idea is very simple we ask each agent the part of the cost he is willing to pay for an arc to be constructed we prove that there exists a unique payoff allocation associated with the subgame perfect nash equilibria of this bargaining mechanism moreover this payoff allocation coincides with the rule defined in bergantinos and vidal puga bergantinos g vidal puga j j 2007a a fair rule in minimum cost spanning tree problems journal of economic theory 137 326 352

do socially responsible fund managers really invest differently to date research into socially responsible investment sri and in particular the socially responsible investment funds industry has focused on whether investing in sri assets has any differential impact on investor returns prior findings generally suggest that on a risk adjusted basis there is no difference in performance between sri and conventional funds this result has led to questions about whether sri funds are really any different from conventional funds this paper examines whether the portfolio allocation across industry sectors and the stock picking ability of sri managers are different when compared to conventional fund managers the study finds that sri funds exhibit different industry betas consistent with different portfolio positions but that these differences vary from year to year it is also found that there is little difference in stock picking ability between the two groups of fund managers

the impact of natural disasters on remittances to low and middle income countries abstractin this paper we offer novel empirical evidence on the impact of natural disasters on remittance flows towards low and middle income countries we consider a panel of 98 countries over th

cost monotonicity consistency and minimum cost spanning tree games abstract we propose a new cost allocation rule for minimum cost spanning tree games the new rule is a core selection and also satisfies cost monotonicity we also give characterisation theorems for the new rule as well as the much studied bird allocation we show that the principal difference between these two rules is in terms of their consistency properties

voluntary auctions for noxious facilities incentives to participate and the efficiency of siting decisions abstract this paper explores the efficiency properties of a voluntary auction under which the city submitting the low bid hosts the region s noxious facility and receives the high bid as compensation in the nash equilibrium of the auction game the auction mechanism is individually rational participation is rational for all values of the local environmental costs of the facility incentive compatible the facility is located in the low cost city and revenue neutral if the compensation of the host city distorts location choices participation in the auction is rational for all values of local environmental costs if the scale economies associated with the noxious facility are large relative to the average local environmental cost and the distortionary cost per dollar of compensation

the message and methods of ethical investment abstract this paper examines a high profile and often provocative segment of the financial industry that of ethical or socially responsible investment by offering an ethical or sustainable product which has the potential to influence so many stakeholders the financial industry is in a unique position to guide change towards corporate sustainability however what message is ethical investment really giving to companies and the financial industry are ethical investors and their rating agencies capable of effectively influencing corporations towards more sustainable patterns of production and consumption and are their approaches consistent with the principles of cleaner production this paper first gives an overview some of the definitions ethical investment and the scale of activities under this umbrella term then the actual screening methods and their application is examined a typology of the different ethical mutual funds is given and two cases of ethical funds are described robur s environmental fund and sustainable asset management s sustainability rating tool each are analysed in terms of their potential to either reveal or conceal cleaner production innovations by the firms they assess in order to ascertain where ethical investment might lead companies the effects of ethical investment on companies and back on the asset management companies themselves is explored a reflexive model of corporate and finance sector learning based on the ethical screens is proposed

bidding for surplus in network allocation problems in this paper we study non cooperative foundations of network allocation rules we focus on three allocation rules the myerson value the position value and the component wise egalitarian solution for any of these three rules we provide a characterization based on component efficiency and some balanced contribution property additionally we present three mechanisms whose equilibrium payoffs are well defined and coincide with the three rules under consideration if the underlying value function is monotonic non monotonic value functions are shown to deal with allocation rules applied to monotonic covers the mechanisms are inspired by the implementation of the shapley value by perez castrillo and wettstein bidding for the surplus a non cooperative approach to the shapley value j econ theory 100 2 2001 274 294

endogenous formation of coalitions the formation of coalitions is a fundamental problem in game theory by a coalition is meant a group of players e g economic or political agents which decide to act together as one unit relative to the rest of the players this includes the instances of syndicates unions cartels blocks political parties parliamentary coalitions etc we would like to emphasize that forming a coalition does not eliminate the individual players as decision makers in all interactions with the other players coalition members act as one unit it may be useful to think of a representative agent taking their place 2 however this arrangement will continue only as long as each player finds it desirable to act this way further bargaining occurs among the members of each coalition on how to divide what they obtained together thus the existence of coalitions implies that the interactions among the players will be conducted on two levels first among the coalitions and second within each coalition most of the existing models in economics and game theory assume that the coalition structure is given exogenously instead we try here to obtain it as an endogenous outcome of our model namely we want to be able to predict which coalitions will in fact form in each given situation 3 our theory combines two kinds of game theoretic concepts value and stability the basic idea is first to evaluate the players prospects in the various coalition structures and then based on these values to find which ones are stable we will call this value coalition structure value or cs value for short the reason we are considering coalition structures i e partitions of the set of players into disjoint coalitions rather than just coalitions is that in general players may find it to their advantage to join forces in some situations and to act separately in others all depending on the way the other participants are organized this implies that both the value and the stability concepts should depend on the entire coalition structure the cs value we analyze in this paper was first developed by owen 7

rational bargaining in games with coalitional externalities this paper provides a flexible strategic framework to analyze bargaining and values in environments with coalitional externalities within this framework we propose a new value that extends the shapley value to partition function form games the so called rational belief shapley rbs value we investigate the strategic foundation of the rbs value by constructing an implementation mechanism this mechanism extends existing models of multilateral bargaining by allowing players a higher degree of freedom to form coalitions the same framework of bidding and renegotiation allows for natural variations of the rbs mechanism in this way alternative shapley like values are obtained and a unified platform to analyze and compare these solutions is provided

an implementation of the owen value abstract we present an implementation of the owen value owen 1977 essays in mathematical economics and game theory pp 76 88 inspired by the bidding mechanism introduced by perez castrillo and wettstein 2001 j econ theory 100 274 294 the idea is the following first players of each coalition play the bidding mechanism trying to obtain the resources of the coalition later players who obtained the resources play the bidding mechanism in order to share the surplus

measuring corporate social responsibility for competitive success at a regional level abstract the relevance of corporate social responsibility in the business world is enhanced by its linkage with other variables of strategic nature in the firm s activity for this purpose the objective of the paper is to define an overall scale to cover their different dimensions social economic and environmental by analyzing the cause effect relations with performance and competitive success this under researched topic has been studied in a sample of 67 medium and big firms within a specific regional context a pioneer region in europe which is starting to promote responsible business behaviour by the regional government for that structural equation methodology based on partial least squares path modelling has been applied the results show the positive direct and significant effect of social responsibility orientation of firms to competitive success and the mediating effect of performance the established set of indicators that define corporate social responsibility provides a simple and useful guidance for responsible actions implementation to upgrade regional competitive success

proposal power and majority rule in multilateral bargaining with costly recognition this paper studies a sequential bargaining model in which agents expend efforts to be the proposer in equilibrium agents effort choices are influenced by the prize and cost effects the endogenous prize is 9

axiomatization of the shapley value on minimum cost spanning tree games abstract this paper axiomatizes the shapley value on minimum cost spanning tree games by using axioms which are different from those used in network games journal of economic literature classification numbers c71 a14

financial development and remittances micro econometric evidence abstract we estimate a behavioural model of household s remittances to investigate to what extent the level of financial development in the home country affects decisions on whether and how much to remit

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

subscription mechanisms for network formation we analyze a model of network formation where the costs of forming links are publicly known but an individual s benefits are not known to the social planner the objective is to design a mechanism which not only ensures that an efficient network always forms in equilibrium but also ensures that the resulting net payoffs to the agents are equitable we propose two mechanisms towards this end in the first agents announce sequentially the set of players with whom they wish to form links and a cost contribution we show that all subgame perfect equilibria of this game result in the formation of an efficient network but the resulting net payoffs are asymmetric the second mechanism corrects this asymmetry through a two stage variant of the first mechanism we also discuss an extension of the basic model to cover the case of directed graphs and give conditions under which the proposed mechanisms are immune to deviations by coalitions

the conditional auction mechanism for sharing a surplus a first bid auction to allocate the leadership role is used to choose a public decision and a balanced set of transfers the mechanism is shown to implement an equal sharing of the surplus above the average utility level at the equilibrium an agent s message reveals the other agent s utility when only two players are involved and the exact value of the joint surplus a variety of other contexts allow for the construction of similar auction like mechanisms displaying the same mirror image effect

fairness and fairness for neighbors the difference between the myerson value and component wise egalitarian solutions abstract we replace the axiom of fairness used in the characterization of the myerson value myerson 1977 by fairness for neighbors in order to characterize the component wise egalitarian solution when a link is broken fairness states that the two players incident to the link should be affected similarly while fairness for neighbors states that a player incident to the link and any of his other neighbors should be affected similarly fairness for neighbors is also used to characterize the component wise egalitarian surplus solution and a two step egalitarian surplus solution these results highlight that egalitarian and marginalistic allocation rules can be obtained by applying the same equal gain loss property to different types of players

efficient bidding with externalities we implement a family of efficient proposals to share benefits generated in environments with externalities these proposals extend the shapley value to games with externalities and are parametrized through the method by which the externalities are averaged we construct two slightly different mechanisms one for environments with negative externalities and the other for positive externalities we show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals

amicable divorce dissolving a partnership with simple mechanisms abstract this paper considers mechanisms for allocating the assets of a dissolving partnership that can be specified without information on the distribution of valuations of the asset or the level of risk aversion of the participants for the case of a single asset and risk averse agents three simple mechanisms are considered these mechanisms can be ranked in terms of ex post efficiency and partially ranked in terms of interim expected utility the efficiency of the alternating selection mechanism is considered for environments when there are many items to be allocated agents are risk neutral and transfers are prohibited conditions are given when a myopic strategy of picking the most preferred abailable item forms an equilibrium and these conditions are satisfied under independence under the further assumption of identical distributions of valuations it is shown that the total expected efficiency loss is at most 1 2 of the maximal value of a single item regardless of how many items are to be allocated

minimum cost arborescences in this paper we analyze the cost allocation problem when a group of agents or nodes have to be connected to a source and where the cost matrix describing the cost of connecting each pair of agents is not necessarily symmetric thus extending the well studied problem of minimum cost spanning tree games where the costs are assumed to be symmetric the focus is on rules which satisfy axioms representing incentive and fairness properties we show that while some results are similar there are also signifcant differences between the frameworks corresponding to symmetric and asymmetric cost matrices

sharing the surplus an extension of the shapley value for environments with externalities economic activities both on the macro and micro level often entail wide spread externalities this in turn leads to disputes regarding the compensation levels to the various parties affected we propose a method of deciding upon the distribution of the gains costs of cooperation in the presence of externalities when forming the grand coalition is efficient we show that any sharing rule satisfying efficiency linearity dummy player and a strong symmetry axioms can be obtained through an average game adding an additional axiom we identify one unique rule satisfying these properties