In this paper, 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.

We consider environments in which agents can cooperate on multiple issues and externalities are present both within and across issues. We propose a way to extend (Shapley) values that have been put forward to deal with externalities within issues to games where there are externalities within and...

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 general, yet simple, method of deciding upon the distribution of the gains (costs) of...

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...

We consider cooperative environments with externalities (games in partition function form) and provide a recursive definition of dividends for each coalition and any partition of the players it belongs to. We show that with this definition and equal sharing of these dividends the averaged sum of...

In this paper, we consider two classes of economic environments. In the first type, agents are faced with the task of providing local public goods that will benefit some or all of them. In the second type, economic activity takes place via formation of links. Agents need both to both form a...

We present a new domain of preferences under which the majority relation is always quasi-transitive and thus Condorcet winners always exist. We model situations where a set of individuals must choose one individual in the group. Agents are connected through some relationship that can be...

We propose and analyze a new solution concept, the R solution, for three-person, transferable utility, cooperative games. In the spirit of the Nash Bargaining Solution, our concept is founded on the predicted outcomes of simultaneous, two-party negotiations that would be the alternative to the...

We study the location-inventory model as introduced by Teo et al. (2001) to analyze the impact of consolidation of distribution centers on facility and inventory costs. We extend their result on profitability of consolidation. We associate a cooperative game with each location-inventory...