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Public Choice

, Volume 136, Issue 1–2, pp 19–37 | Cite as

Paying the partners

  • T. Nicolaus Tideman
  • Florenz PlassmannEmail author
Article

Abstract

When three or more individuals with disparate talents form a business partnership, they may find it difficult to agree on how their profits will be divided. This paper explores a rule for dividing the profits that depends only on the partners’ estimates of the relative contributions of other partners. No partner can affect his own share by the input that he provides. If there is a division that is consistent with the relative contributions suggested by all partners, then the division rule assigns these shares. We provide the intuition for the division rule and investigate several of its properties.

Keywords

Fair division Aggregating opinions Dirichlet distribution 

JEL

D33 D72 

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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.Department of EconomicsVirginia Polytechnic Institute and State UniversityBlacksburgUSA
  2. 2.Department of EconomicsState University of New York at BinghamtonBinghamtonUSA

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