Shapley mappings and the cumulative value for n-person games with fuzzy coalitions

In this paper we prove existence and uniqueness of the so-called Shapley mapping, which is a solution concept for a class of n-person games with fuzzy coalitions whose elements are defined by the specific structure of their characteristic functions. The Shapley mapping, when it exists, associates to each fuzzy coalition in the game an allocation of the coalitional worth satisfying the efficiency, the symmetry, and the null-player conditions. It determines a “cumulative value” that is the “sum” of all coalitional allocations for whose computation we provide an explicit formula.     

Monge extensions of cooperation and communication structures

Cooperation structures without any a priori assumptions on the combinatorial structure of feasible coalitions are studied and a general theory for marginal values, cores and convexity is established. The theory is based on the notion of a Monge extension of a general characteristic function, which is equivalent to the Lovász extension in the special situation of a classical cooperative game. It is shown that convexity of a cooperation structure is tantamount to the equality of the associated core and Weber set. Extending Myerson’s graph model for game theoretic communication, general communication structures are introduced and it is shown that a notion of supermodularity exists for this class that characterizes convexity and properly extends Shapley’s convexity model for classical cooperative games.     

Avoiding unfairness of Owen allocations in linear production processes

This paper deals with cooperation situations in linear production problems in which a set of goods are to be produced from a set of resources so that a certain benefit function is maximized, assuming that resources not used in the production plan have no value by themselves. The Owen set is a well-known solution rule for the class of linear production processes. Despite their stability properties, Owen allocations might give null payoff to players that are necessary for optimal production plans. This paper shows that, in general, the aforementioned drawback cannot be avoided allowing only allocations within the core of the cooperative game associated to the original linear production process, and therefore a new solution set named EOwen is introduced. For any player whose resources are needed in at least one optimal production plan, the EOwen set contains at least one allocation that assigns a strictly positive payoff to such player.     

On the core of information graph games

This paper considers a subclass of minimum cost spanning tree games, called information graph games. It is proved that the core of these games can be described by a set of at most 2n — 1 linear constraints, wheren is the number of players. Furthermore, it is proved that each information graph game has an associated concave information graph game, which has the same core as the original game. Consequently, the set of extreme core allocations of an information graph game is characterized as the set of marginal allocation vectors of its associated concave game. Finally, it is proved that all extreme core allocations of an information graph game are marginal allocation vectors of the game itself, though not all marginal allocation vectors need to be core allocations.     

Second variation and Legendrian stabilities of minimal Legendrian submanifolds in Sasakian manifolds

First, we derive a new second variation formula which holds for minimal Legendrian submanifolds in Sasakian manifolds. Using this, we prove that any minimal Legendrian submanifold in an η-Einstein Sasakian manifold with “nonpositive” η-Ricci constant is stable. Next we introduce the notion of the Legendrian stability of minimal Legendrian submanifolds in Sasakian manifolds. Using our second variation formula, we find a general criterion for the Legendrian stability of minimal Legendrian submanifolds in η-Einstein Sasakian manifolds with “positive” η-Ricci constant.     

An axiomatic approach to egalitarianism in TU-games

A core concept is a solution concept on the class of balanced games that exclusively selects core allocations. We show that every continuous core concept that satisfies both the equal treatment property and a new property called independence of irrelevant core allocations (IIC) necessarily selects egalitarian allocations. IIC requires that, if the core concept selects a certain core allocation for a given game, and this allocation is still a core allocation for a new game with a core that is contained in the core of the first game, then the core concept also chooses this allocation as the solution to the new game. When we replace the continuity requirement by a weak version of additivity we obtain an axiomatization of the egalitarian solution concept that assigns to each balanced game the core allocation minimizing the Euclidean distance to the equal share allocation.     

A stochastic and asymmetric-information framework for a dominant-manufacturer supply chain

Consider a dominant manufacturer wholesaling a product to a retailer, who in turn retails it to the consumers at $p/unit. The retail-market demand volume varies with p according to a given demand curve. This basic system is commonly modeled as a manufacturer-Stackelberg ([mS]) game under a “deterministic and symmetric-information” (“det-sym-i”) framework. We first explain the logical flaws of this framework, which are (i) the dominant manufacturer-leader will have a lower profit than the retailer under an iso-elastic demand curve; (ii) in some situations the system’s “correct solution” can be hyper-sensitive to minute changes in the demand curve; (iii) applying volume discounting while keeping the original [mS] profit-maximizing objective leads to an implausible degenerate solution in which the manufacturer has dictatorial power over the channel. We then present an extension of the “stochastic and asymmetric-information” (“sto-asy-i”) framework proposed in Lau and Lau [Lau, A., Lau, H.-S., 2005. Some two-echelon supply-chain games: Improving from deterministic–symmetric-information to stochastic-asymmetric-information models. European Journal of Operational Research 161 (1), 203–223], coupled with the notion that a profit-maximizing dominant manufacturer may implement not only [mS] but also “[pm]”—i.e., using a manufacturer-imposed maximum retail price. We show that this new framework resolves all the logical flaws stated above. Along the way, we also present a procedure for the dominant manufacturer to design a profit-maximizing volume-discount scheme using stochastic and asymmetric demand information.     

Fundamental results for pointfree convex geometry

Inspired by locale theory, we propose “pointfree convex geometry”. We introduce the notion of convexity algebra as a pointfree convexity space. There are two notions of a point for convexity algebra: one is a chain-prime meet-complete filter and the other is a maximal meet-complete filter. In this paper we show the following: (1) the former notion of a point induces a dual equivalence between the category of “spatial” convexity algebras and the category of “sober” convexity spaces as well as a dual adjunction between the category of convexity algebras and the category of convexity spaces; (2) the latter notion of point induces a dual equivalence between the category of “m-spatial” convexity algebras and the category of “m-sober” convexity spaces. We finally argue that the former notion of a point is more useful than the latter one from a category theoretic point of view and that the former notion of a point actually represents a polytope (or generic point) and the latter notion of a point properly represents a point. We also remark on the close relationships between pointfree convex geometry and domain theory.     

Flat transversals to flats and convex sets of a fixed dimension

Helly and Hadwiger type theorems for transversal m-flats to families of flats and, respectively, convex sets of dimension n are proved in the case of general position. The proofs rely on Helly type theorems for “linear partitions” and “convex partitions,” so that a general theory of Helly numbers is also developed.     

Coherent risk measures, coherent capital allocations and the gradient allocation principle

The gradient allocation principle, which generalizes the most popular specific allocation principles, is commonly proposed in the literature as a means of distributing a financial institution’s risk capital to its constituents. This paper is concerned with the axioms defining the coherence of risk measures and capital allocations, and establishes results linking the two coherence concepts in the context of the gradient allocation principle. The following axiom pairs are shown to be equivalent: positive homogeneity and full allocation, subadditivity and “no undercut”, and translation invariance and riskless allocation. Furthermore, we point out that the symmetry property holds if and only if the risk measure is linear. As a consequence, the gradient allocation principle associated with a coherent risk measure has the properties of full allocation and “no undercut”, but not symmetry unless the risk measure is linear. The results of this paper are applied to the covariance, the semi-covariance, and the expected shortfall principle. We find that the gradient allocation principle associated with a nonlinear risk measure can be coherent, in a suitably restricted setting.     

Cooperative facility location games

The location of facilities in order to provide service for customers is a well-studied problem in the operations research literature. In the basic model, there is a predefined cost for opening a facility and also for connecting a customer to a facility, the goal being to minimize the total cost. Often, both in the case of public facilities (such as libraries, municipal swimming pools, fire stations, … ) and private facilities (such as distribution centers, switching stations, … ), we may want to find a ‘fair’ allocation of the total cost to the customers—this is known as the cost allocation problem. A central question in cooperative game theory is whether the total cost can be allocated to the customers such that no coalition of customers has any incentive to build their own facility or to ask a competitor to service them. We establish strong connections between fair cost allocations and linear programming relaxations for several variants of the facility location problem. In particular, we show that a fair cost allocation exists if and only if there is no integrality gap for a corresponding linear programming relaxation; this was only known for the simplest unconstrained variant of the facility location problem. Moreover, we introduce a subtle variant of randomized rounding and derive new proofs for the existence of fair cost allocations for several classes of instances. We also show that it is in general NP-complete to decide whether a fair cost allocation exists and whether a given allocation is fair.     

Embedding processes in combinatorial game theory

Berlekamp asked the question “What is the habitat of ∗2?” (See Guy, 1996 [6].) It is possible to generalize the question and ask “For a game G, what is the largest n such that ∗n is a position of G?” This leads to the concept of the nim dimension. In Santos and Silva (2008) [8] a fractal process was proposed for analyzing the previous questions. For the same purpose, in Santos and Silva (2008) [9], an algebraic process was proposed. In this paper we implement a third idea related to embedding processes. With Alan Parr’s traffic lights, we exemplify the idea of estimating the “difficulty” of the game and proving that its nim dimension is infinite.     

A new rating system for duplicate bridge

We propose a new way to rate individual duplicate bridge players, which we believe is superior to the masterpoint system currently used by the American Contract Bridge League. This method measures only a player’s current skill level, and not how long or how frequently he has played. It is based on simple ideas from the theory of statistics and from linear algebra, and should be easy to implement.One particular issue which can occur within any system proposing to rate individual players using results earned by partnerships is what we call the “nonuniqueness problem”. This refers to the occasional inability for data to distinguish who is the “good player” and who is the “bad player” within particular partnerships. We prove that under our system this problem disappears if either (a) a certain “partnership graph” has no bipartite components, or if (b) every player is required to participate in at least one individual game.Finally, we present some data from a bridge club in Reno, NV. They show that even if (a) and (b) do not hold, our system will provide (unique) ratings for most players.     

Transshipment games with identical newsvendors and cooperation costs

In a transshipment game, supply chain agents cooperate to transship surplus products. Although the game has been well studied in the OR literature, the fundamental question whether the agents can afford cooperation costs to set up and maintain the game in the first place has not been addressed thus far. This paper addresses this question for the cooperative transshipment games with identical agents having normally distributed independent demands. We provide characterization of equal allocations which are in the core of symmetric games, and prove that not all transshipment games are convex. In particular, we prove that though individual allocations grow with the coalition size, the growth diminishes according to two rules of diminishing individual allocations. These results are the basis for studying the games with cooperation costs. We model the cooperation costs by the cooperation network topology and the cooperation cost per network link. We consider two network topologies, the clique and the hub, and prove bounds for the cost per link that render coalitions stable. These bounds always limit coalition size for cliques. However, the opposite is shown for hubs, namely newsvendors can afford cooperation costs only if their coalition is sufficiently large.     

Risky asset allocation and consumption rule in the presence of background risk and insurance markets

This study examines joint decisions regarding risky asset allocation and consumption rate for a representative agent in the presence of background risk and insurance markets. Contrary to the conclusion of the “mutual fund separation theorem”, we show that the optimal risky asset mix will reflect an agent’s risk attitude as long as background risk is not independent of investment risk. This result can, however, be used to solve the “riskyasset allocation puzzle”. We also unveil that optimal insurance to shift background risk is determined through establishing a hedging portfolio against investment risk and is an arrangement maintaining the balance between growth and volatility of expected consumption. Because the optimal insurance we obtain generally leads to a smoother consumption path, it may plausibly explain the “equity premium puzzle” in the financial literature.     

The enriched Vietoris monad on representable spaces

Employing a formal analogy between ordered sets and topological spaces, over the past years we have investigated a notion of cocompleteness for topological, approach and other kind of spaces. In this new context, the down-set monad becomes the filter monad, cocomplete ordered set translates to continuous lattice, distributivity means disconnectedness, and so on. Curiously, the dual(?) notion of completeness does not behave as the mirror image of the one of cocompleteness; and in this paper we have a closer look at complete spaces. In particular, we construct the “up-set monad” on representable spaces (in the sense of L. Nachbin for topological spaces, respectively C. Hermida for multicategories); we show that this monad is of Kock–Zöberlein type; we introduce and study a notion of weighted limit similar to the classical notion for enriched categories; and we describe the Kleisli category of our “up-set monad”. We emphasise that these generic categorical notions and results can be indeed connected to more “classical” topology: for topological spaces, the “up-set monad” becomes the lower Vietoris monad, and the statement “X   is totally cocomplete if and only if X^op$X^{\mathrm{op}}$ is totally complete” specialises to O. Wyler's characterisation of the algebras of the Vietoris monad on compact Hausdorff spaces as precisely the continuous lattices.     

A note on randomized Shepp’s urn scheme

Shepp’s urn model is a useful tool for analyzing the stopping-rule problems in economics and finance. In [R.W. Chen, A. Zame, C.T. Lin, H. Wu, A random version of Shepp’s urn scheme, SIAM J. Discrete Math. 19 (1) (2005) 149-164], Chen et al. considered a random version of Shepp’s urn scheme and showed that a simple drawing policy (called “the k in the hole policy”) can asymptotically maximize the expected value of the game. By extending the work done by Chen et al., this note considers a more general urn scheme that is better suited to real-life price models in which the short-term value might not fluctuate. Further, “the k in the hole policy” is shown to be asymptotically optimal for this new urn scheme.     

Conflict dissolution by reframing game payoffs using linear perturbations

Human beings have a prevailing drive to achieve their self-interest goals or equilibrium states, which may subsume their social interests. An ideal working environment or cooperative game situation would be one in which each participant or player maximizes his/her own interest while maximizing his/her contribution to the collective group interest. This paper addresses the feasibility, methods, and bounds for reframing a generaln-person game into an ideal game in which full cooperation or a targeted solution can be induced and maintained by the players' self-interest maximization. Criteria for good reframing are introduced. Monotonic games, self-interest cooperative and noncooperative games, and a decomposition theory of general games are also introduced to facilitate the study. It is shown that everyn-person game can be written as the sum of a self-interest cooperative game and a self-interest noncooperative game. Everyn-person game can be reframed so that full cooperation can be achieved by the players' self-interest maximization. Everyn-person game can be reframed so that a targeted solution can be obtained and maintained through the players' self-interest maximization.     

How much randomness is needed for statistics?

In algorithmic randomness, when one wants to define a randomness notion with respect to some non-computable measure λ, a choice needs to be made. One approach is to allow randomness tests to access the measure λ as an oracle (which we call the “classical approach”). The other approach is the opposite one, where the randomness tests are completely effective and do not have access to the information contained in λ (we call this approach “Hippocratic”). While the Hippocratic approach is in general much more restrictive, there are cases where the two coincide. The first author showed in 2010 that in the particular case where the notion of randomness considered is Martin-Löf randomness and the measure λ is a Bernoulli measure, classical randomness and Hippocratic randomness coincide. In this paper, we prove that this result no longer holds for other notions of randomness, namely computable randomness and stochasticity.