Cost Share Adjustment Processes for Cooperative Group Decisions about Shared Goods: A Design Approach
For group decision about shared goods, the nature of the shared good and how its cost is to be shared among group members must be determined. Complexity arises from heterogeneity in preferences and endowments and nonlinear cost. To facilitate group decision, this paper proposes special type of group decision support system, a cost share adjustment process (CSAP), in which cost shares are adjusted iteratively via algorithmic rules until unanimity is reached, ideally producing a socially optimal, cost feasible, and fair outcome. In contrast to public good literature, our designs apply for situations of nonlinear cost, with economies of scale and fixed costs. In response to impossibility theorems, a design approach is developed: design elements for CSAPs include message space, cost allocation and adjustment rules, controllers, and incentive rules, with many possibilities for specifying a process. Simulation and economic experiment are employed to compare alternative designs, in particular highlighting the incentive effects of message space. As simulation and experiment both indicate, complicated cost allocation rules for incentive purposes may impede locating group agreement. Instead, economic experiments show that unanimity Approval Voting can mitigate the effects of strategic behavior.
Loehman, E. T., Kiser, R., & Rassenti, S. J. (2013). Cost share adjustment processes for cooperative group decisions about shared goods: A design approach. Group Decision and Negotiation, 23(5), 1085–1126. doi: 10.1007/s10726-013-9342-x
This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Group Decision and Negotiation, volume 23, issue 5, in 2014 following peer review. The final publication is available at Springer via DOI: 10.1007/s10726-013-9342-x.