Revenue sharing on hierarchies

Abstract

We consider a model of joint venture where agents form a hierarchical network and each agent produces her revenue through collaborating with her superiors. We study the problemof allocating the total revenue among the agents. A hierarchy is represented by a directed tree. We investigate allocation rules that are robust to coalitional manipulations through allocating revenues within a coalition. A coalitional manipulation is feasible when the coalition is connected and includes all the superiors of its members. We characterize families of nonmanipulable rules that satisfy standard axioms in the literature of fair allocation theory.