A Compromise Stable Extension of Bankruptcy Games: Multipurpose Resource Allocation
18 Pages Posted: 19 Mar 2011 Last revised: 20 Apr 2011
Date Written: March 14, 2011
This paper considers situations characterized by a common-pool resource, which needs to be divided among agents. Each of the agents has some claim on this pool and an individual reward function for assigned resources. This paper analyzes not only the problem of maximizing the total joint reward, but also the allocation of these rewards among the agents. Analyzing these situations a new class of transferable utility games is introduced, called multipurpose resource games. These games are based on the bankruptcy model, as introduced by O'Neill (1982). It is shown that every multipurpose resource game is compromise stable. Moreover, an explicit expression for the nucleolus of these games is provided.
Keywords: bankruptcy games, compromise stability, nucleolus
JEL Classification: C71
Suggested Citation: Suggested Citation