Profit sharing in unique Nash equilibrium: Characterization in the two-agent case

B-Tier
Journal: Games and Economic Behavior
Year: 2008
Volume: 62
Issue: 2
Pages: 558-572

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Two agents jointly operate a decreasing marginal returns technology to produce a private good. We characterize the class of output-sharing rules for which the labor-supply game has a unique Nash equilibrium. It consists of two families: rules of the serial type which protect a small user from the negative externality imposed by a large user, and rules of the reverse serial type, where one agent effectively employs the other agent's labor. Exactly two rules satisfy symmetry; a result in sharp contrast with Moulin and Shenker's characterization of their serial mechanism as the unique cost-sharing rule satisfying the same incentives property [Moulin, H., Shenker, S., 1992. Serial cost sharing. Econometrica 60 (5), 1009-1037]. We also show that the familiar stand-alone test characterizes the class of fixed-path methods under our incentives criterion [Friedman, E.J., 2004. Strong monotonicity in surplus sharing. Econ. Theory 23, 643-658].

Technical Details

RePEc Handle
repec:eee:gamebe:v:62:y:2008:i:2:p:558-572
Journal Field
Theory
Author Count
1
Added to Database
2026-01-25