Profit Sharing with Thresholds and Non-monotone Player Utilities
We study profit sharing games in which players select projects to participate in and share the reward resulting from that project equally. Unlike most existing work, in which it is assumed that the player utility is monotone in the number of participants working on their project, we consider non-monotone player utilities. Such utilities could result, for example, from “threshold” or “phase transition” effects, when the total benefit from a project improves slowly until the number of participants reaches some critical mass, then improves rapidly, and then slows again due to diminishing returns.
Non-monotone player utilities result in a lot of instability: strong Nash equilibrium may no longer exist, and the quality of Nash equilibria may be far away from the centralized optimum. We show, however, that by adding additional requirements such as players needing permission to leave a project from the players currently on this project, or instead players needing permission to a join a project from players on that project, we ensure that strong Nash equilibrium always exists. Moreover, just the addition of permission to leave already guarantees the existence of strong Nash equilibrium within a factor of 2 of the social optimum. In this paper, we provide results on the existence and quality of several different coalitional solution concepts, focusing especially on permission to leave and join projects, and show that such requirements result in the existence of good stable solutions even for the case when player utilities are non-monotone.
KeywordsNash Equilibrium Social Optimum Potential Game Contractual Obligation Stability Concept
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