Shapley-Value Parables of Corporations as Evolutive Systems of Associational Cognition

Abstract

Instead of taking the orthodox view of business corporations as nexuses of contracts as a basic premise, this article focuses on their aspect as “incorporating” autonomous systems of associational (group-level) cognition for business objectives. In order for such a system to be consistent with the individual rationality of participants and organizational efficiency, the sharing of “fairness” norm among them is logically necessary and sufficient. Under such generic property, business corporations may evolve in varied architectural forms associated with corresponding norms and governance structures. As the complexity of corporate cognitive environments increases, business corporations tend to develop modular systems of associational cognition, which would make the orthodox premise of the shareholder sovereignty questionable.

Keywords: Comparative corporate governance, fairness norm, associational (distributed) cognition, asset essentiality, potential game, Shapley value, Nash bargaining, modularity

JEL Classification: C71, C78, D20, D86, G34, L20