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Research Highlights

Axiomatic and Strategic Justifications for the Constrained Equal Benefits Rule in the Airport Problem (with Chen-Cheng Hu and Min-Hung Tsay, published in GAMES AND ECONOMIC BEHAVIOR in 2012)

  • Author Chen-Cheng Hu
    Min-Hung Tsay
    Chun-Hsien Yeh
  • Abstract We consider the “airport problem”, which is concerned with sharing the cost of an airstrip among agents who need airstrips of different lengths. We investigate the implications of two properties, Left-endpoint Subtraction (LS) bilateral consistency and LS converse consistency, in the airport problem. First, on the basis of the two properties, we characterize the constrained equal benefits rule, which equalizes agents' benefits subject to no one receiving a subsidy. Second, we introduce a 2-stage extensive form game that exploits LS bilateral consistency and LS converse consistency. We show that there is a unique subgame perfect equilibrium outcome of the game and moreover, it is the allocation chosen by the constrained equal benefits rule.
  • Link http://www.sciencedirect.com/science/article/pii/S089982561100203X(Open New Window)