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SSRN Electronic Journal
Article . 2012 . Peer-reviewed
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Cost Share Adjustment Processes for Cooperative Group Decisions about Shared Goods: A Design Approach

Authors: Edna Tusak Loehman;

Cost Share Adjustment Processes for Cooperative Group Decisions about Shared Goods: A Design Approach

Abstract

For group decision about shared goods, the nature of the shared good and how its cost is to be shared among group members must be determined. Complexity arises from heterogeneity in preferences and endowments and nonlinear cost. To facilitate group decision, this paper proposes special type of group decision support system, a cost share adjustment process (CSAP), in which cost shares are adjusted iteratively via algorithmic rules until agreement is reached, ideally producing a socially optimal, cost feasible, and fair outcome. Design elements for CSAPs include message space, cost allocation and adjustment rules, controllers, and incentive rules, with many possibilities for a cost share adjustment process. In contrast to public good literature, our designs apply for situations of nonlinear cost, with economies of scale and fixed costs. Because of impossibility theorems, a design approach is developed: simulation and economic experiment are employed to compare alternative designs. As simulation and experiment both indicate, complicated rules for incentive purposes may impede locating group agreement. Instead of complicated economic incentive rules, economic experiments show that unanimity Approval Voting can mitigate the effects of strategic behavior.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
bronze