Empirical Study on Fair Allocation of Joint Project by Cooperative Game Theory-A Case of Local Bus Transportation Service in Japan-

Abstract

This study focused on real world conflicts over the allocation of costs in cases where several municipalities jointly maintain local bus transportation services. Traditionally, agreement over allocation of costs is reached through discussions between municipalities, which can be divided into two stages without any assistance from knowledge of game theory. Two points were analyzed during the study: the structure of the game and the concept of fairness behind each case. We described real situations using cooperative game theory and interpreted the games as consisting of two stages including the proposition of cost allocation methods followed by the seeking of acceptable allocations. The fair allocation concepts behind each case were identified and disruption nucleolus was shown to be among the most plausible concepts. These results were used to illustrate the procedure to allocate the costs, which was concluded as being useful to resolve conflicts over the allocation of costs of local bus transportation services jointly maintained by several municipalities.