"Generalized Shapley axioms and value allocation in cooperative games via Hodge theory on graphs"

Speaker: Tongseok Lim, Purdue University

Abstract: Lloyd S. Shapley introduced a set of axioms in 1953, now called the Shapley axioms, and showed that the axioms characterize a natural allocation among the players who are in grand coalition of a cooperative game. Recently, A. Stern and A. Tettenhorst showed that a cooperative game can be decomposed into a sum of component games, one for each player, whose value at the grand coalition coincides with the Shapley value.  The component games are defined by the solutions to the naturally defined system of least squares - or Poisson - equations via the framework of the Hodge decomposition on the hypercube graph.

In this talk we propose a new set of axioms which characterizes the component games. Furthermore, we realize them through an intriguing stochastic path integral driven by a canonical Markov chain. The integrals are natural representation for the expected total contribution made by the players for each coalition, and hence can be viewed as their fair share. This allows us to interpret the component game values for each coalition also as a valid measure of fair allocation among the players in the coalition. Finally, we extend the path integrals on general graphs and discover a fundamental connection between stochastic integrations and Hodge theory on graphs.

Hosts: Ari Stern and Jonathan Weinstein (Economics)