SMU SOE Seminar (Apr 26, 2018): Revenue Sharing on Hierarchies

We consider a model of joint venture where agents are organized on a hierarchical network and each agent produces her revenue through collaborating with her superiors. We study the problem of allocating the total revenue among the agents. A hierarchy is represented by a directed tree. We investigate allocation rules that are robust to reallocation of revenues within any coalition that includes all the superiors of its members. We obtain characterizations of such rules imposing standard axioms in the literature of fair allocation theory.