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 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 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 propose a new solution concept to address the problem of sharing a surplus among the agents generating it. The problem is formulated in the preferences-endowments space. The solution is defined recursively, incorporating notions of consistency and fairness and relying on properties satisfied...

We propose a simple mechanism that implements the Ordinal Shapley Value (Prez-Castrillo and Wettstein [2005]) for economies with three or less agents.

The existence of punishment opportunities has been shown to cause efficiency in public goods experiments to increase considerably. In this paper we ask whether punishment also has a downside in terms of process dissatisfaction. We conduct an experiment to study the conjecture that an environment...

We show that the full version of the so-called "rural hospital theorem" generalizes to many-to-many matching problems where agents on both sides of the problem have substitutable and weakly separable preferences. We reinforce our result by showing that when agents' preferences satisfy...

This paper studies many-to-one matching markets where each student is assigned to a hospital. Each hospital has possibly multiple positions and responsive preferences. We study the game induced by the student-optimal stable matching mechanism. We assume that students play their weakly dominant...

Evidence showing that individual behavior often deviates from the classical principle of preference maximization has raised at least two important questions: (i) How serious are the deviations? and (ii) What is the best way to analyse choice behavior in order to extract information for the...