Game Theory 2010

Note 5, page 1

Lecture notes in cooperative games 5

Solution concepts for TU-games III

The Shapley value

1. Introduction
In the solution concepts that we have seen up to now (namely the vNM solution and the
core), the argument has been linked to the dominance relation introduced at the outset. In our
interpretation of this this relation dominance is an expression of strength, ability to manage
the distribution of wealth just as well as it was done in the dominated situation.
Instead of this strength or efficiency argument we might as well have started with a
fairness or equality argument. This would obviously have given rise to other solutions, but
one cannot say that one argument is more natural or more fundamental than the other.
The Shapley value, which we consider in this chapter, may be considered as based on
some kind of fairness consideration, and it thus represent the second type of argument. But
there are other, more formal aspects, where the Shapley value differs from what we have
seen so far. The most striking difference is that the Shapley value provides a single payoff
or imputation (at least for sufficiently well-behaved games, as we shall see), where we have
previously had to accept a set, or even a family of sets, as solutions. To this may be added that
the Shapley value can be computed in a relatively straightforward way from the data of the
game, and it is clear that this gives us a solution concept which is rather attractive. Indeed,
the Shapley value has had more practical applications than most other solution concepts.

2. Stochastic coalition formation and the Shapley value

In the proof of nonemptiness of the core for convex games we introduced a procedure which
has interest beyond above the concrete case: For each permutation of players, we let the
coalitions be formed successively as the initial segments of players in the given order given
by this permutaton. Consider such a permutation of the players. For a player i such that
(i) = k,
v(S,(i) ) v(S,(i)1 )
is an expression of what the coalition S = S,(i) loses if i leaves the coalition from (and S
thus becomes S,(i)1 ) and thereby an assessment of what the coalition S may ultimately

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Note 5, page 2

be forced to pay in order to make i stay. As such it is an expression of player is bargaining

power against the coalition S (given the permutation ).
Now suppose that the actual sequence of players to emerge in the formation of coalitions
is completely random, so that each permutation is considered equally likely. We can then
find player is average bargaining power, which will be
i (v) =

1 X
[v(S,(i) )
n!

v(S,(i)1 )].

(1)

The sum in (1) can be written in a somewhat simpler way: Instead of summing over all
permutation we collect all cases where S,(i) is the same coalition S. The number
of permutations of the player where this happens (for a given S which contains i) is
(s 1)!(n s)!, where s = jS j, corresponding to all (n 1)-tuples with something from S
in the first s positions and something from N nS in the last n s places. In total we have
i (v) =

(s

{S|iS}

1)!(n
n!

s)!

[v(S)

v(S n fig)].

(2)

The function that sends the game (N, v) in the vector (v) = (1 (V ), . . . , n (v)), called
the Shapley value.
P
Using the expression (1) we can we find iN i (v) by first summing over i for each
and then summing over , and we get
X

[v(S,(i)1 )

v(S,(i)1 )]

iN

= v(S,1 ) + [v(S,2 )

v(S,1 )] +


+ [v(S,n )

v(S,n1 )]

= v(S,n ) = v(N ),
which shows that iN i (v) = n!1 v(N ) = V (N ). The payoff vector (1 (v), . . . , n (v))
thus sums to v(N )). However, it is not necessarily an imputation: Consider for example the
game v with v(S) = 1, all S 2 S . Here (v) = ( n1 , . . . , n1 ), but v(fig) = 1 > n1 for all i.
However, if the game (N, v) is superadditive,
P

v(S)  v(S n fig) + v(fig)

for all i and S 2 S , so that i (v)  v(fig) for all i. We conclude that for superadditive games
the Shapley value is an imputation and can be considered a solution for the game.

3. The axiomatic approach to the Shapley value

The Shapley value has several nice properties: First of all it has the purely technical
advantage that (v) exists (as distinct from core and vNM solutions) for any game. Secondly

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and for the interpretation maybe more importantly it satisfies some reasonable demands to
a payoff vector, which should reflect each players power both individually and in coalitions.
A first illustration of this can obtained by considering the so-called unanimity games.
For T 2 S ) we let eT be the game given by


ET (S) =

1 if T  S
0 otherwise

In order to obtain positive payoffs in this game, at least the coalition T must be formed.
Players outside T has little obvious strength (in our terminology from note 2, they are 0dummies), while members of T can be considered as having equal value. It seems therefore
natural to view the imputation x with xi = 1/jT j for i 2 T and xi = 0 for i 2
/ T v as an
expression of the just (with respect to players position) solution to this game. This pay-off
vector, which is an imputation since eT is superadditive, is precisely (eT ).
Before we proceed, we note that the unanimity games eT for T 2 S actually have a
special position among all games. If we consider a game (with fixed set of players N and
set of coalitions S ) as a vector with jSj coordinates, where the coordinates corresponding to
S 2 S is v(S), then eT is the vector with with coordinate 1 for T  S and 0 otherwise, a
kind of unit vector. Actually, the following holds.
Lemma 1. The set feT j T 2 Sg is a basis for the vector space RS , ie. any game v can be
written uniquely as a linear combination of the games eT ,
v=
where the coefficients cT , T

c e ,
T S T T

2 S , are given by
cT =

( 1)ts v(S).

ST

Proof: We show first, that the vectors eT , T

X

2 S , are linearly independent. Suppose that

aT e T = 0

T S

where 0 is the null vector in RS . For T = fig this means that a{i} = 0, = 1, . . . , n. For
T = fi, j g we then get that a{i,j} = 0, etc.. In total, we find that aT = 0 for all T .
It now suffices to show that every v has a representation as stated, since uniqueness
follows from the linear independence of the eT . Let vR be the coordinate corresponding to
P
the coalition R in the vector T S aT eT . We have then
vR =

X X
T S ST

( 1)ts v(S)eT (R) =

X X
T R ST

( 1)ts v(S),

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Note 5, page 4

since eT (R) = 0 for T such that T 6 R. For every T  R, we must then sum over S  T
and then over T . This is equivalent to summation, for each S  R, over T between S and R
(and then over S), that is
X
X
vR =
( 1)ts v(S)
SR {T |ST R}

X
SR

There are

(rs
ts )

v(S)

( 1)ts .

{T |ST R}

coalitions T with jT j = t between S and R, so we have that

vR =

v(S)

r
X

( 1)

ts

SR

ts

r
t

X
s
=
v(S)(1
s
SR

where we have used the binomial formula (a + b)n =

Pn

i=0

1)rs = v(R),

(ni)ai bni .

We can use this result to express the Shapley value of a game (N, v) in another way.
There following holds:
Lemma 3. The Shapley value is a linear mapping from RS to RN .
Proof: Let v = v1 + v 2 (where the games (N, v) are regarded as elements in the vector space
RS . Then for each i 2 N we have
X (s 1)!(n s)!
i (v) =
[v(S) v(S n fig)]
n!
{S|iS}
=

X
{S|iS}

v1 (S n fI g)]

[v2 (S)

v2 (S n fig)] = i (v1 ) + i (v2 ).

1)!(n
n!

s)!

(s

1)!(n
n!

s)!

{S|iS}

[v1 (S)

(s

Similarly, it is shown that i (av) = ai (v) for a 2 R.

Since a linear mapping, in this case , is uniquely defined by its values at a basis, we get
the following:
Corollary.
Let the game v by given by the expression v =
P
(v) = T S cT (eT ).

T S

cT eT . Then

We can now elaborate on the comments above regarding the characterization of the
Shapley value as a reasonable payoff vector in v. In the following, we consider games
(N, v) with fixed set of players N and family of coalitions S . We introduce an abstract value
of a game and then state some properties of this abstract value that characterizes it as the
Shapley value.
An (abstract) value is a mapping from games v to payoff vectors (x1 , . . . , xn ). The
Shapley value is an example of a value, but there may at this stage of our reasoning be many
others (and in fact we come later on such, for instance the nucleolus and the -value).
Below we state some fairly obvious demands of reasonableness to such a value in the
form of axioms.

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Axiom 1 (linearity).
a, b 2 R.

(av1 bv2 ) = a(v1 b(v2 ) for all v1 , v2 and all real numbers

Axiom 2 (Pareto optimality).

iN

i (v) = v(N ) for all v.

Axiom 3 (symmetry). Let : N ! N be a permutation. If v is the game defined by

(v)(S) = v( 1 (S)) for S 2 S and x is the payoff vector determined by (x)i = x1 (i)
for i 2 N , then
(v) = (v).
If i is such that v(S) = v(S

Axiom 4 (dummy axiom).

v(fig = 0, then i (v) = 0.

n fig) for all S 2 S , and

We now have the following characterization of the Shapley value.

Theorem 4.
Shapley value.

There is exactly one valie satisfying Axioms 1 to 4, and this value is the

Proof: First of all we show that satisfies Axioms 1 - 4. We have already shown Axiom 1
(Lemma 3) and 2. Axiom 4 follows immediately from the expression (2). Finally we Axiom
3 from
X (s 1)!(n s)!
v( 1 (S)) v( 1 (S n fig))
i (v) =
n!
{S|iS}

2 S do the summation over S 0 = 1(S)

Here we can instead of summing over S with i

with 1 (i) 2 S 0 , i.e.
X

i (v) =

(s

1)!(n
n!

{S| 1 (i)S}

s)!

v(S)

v(S n fig)

= 1 (i) v.
In order to show that is the only value satisfying Axioms 1 to 4 we consider an arbitrary
value . Let eT for T 2 S be a unanimity game. Then i (eT ) = 0 for i 62 T (Axiom 4).
P
Accoding to Axiom 2 we must have that iT i (eT ) = (eT )(N ) = 1, and from Axiom 3
we get that i (eT ) = j (eT ) for i, j 2 T , that is
(

i (eT ) =

1/jT j
0

for i 2 T
otherwise,

or (eT ) = (eT ).
P
Now let v = T cT eT be an arbitrary game. We then have
(v) = (

T S

X
T S

cT eT ) =

(cT eT ) =

T S

cT (eT ) = (

T S

cT (eT )

T S

cT eT ) = (v)

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where we have used the linearity axiom on both the abstract value and the Shapley value
. Summing up, we have (v) = (v) for all v or = .

4. Properties of the Shapley value

In general little can be said about the relation between the Shapley value of a game (N, v)
and the previously introduced solution concepts vNM-solutions and the core. However, the
class of convex games again turns out to be well-behaved:
Theorem 5. Let (N, v) be a convex game. Then (v) 2 Core(N, v).
Proof: Writing the expression (1) in vector form we get that
(v) =

1X
x ,
n!

where we have used the notation introduced in the discussion of convex games in Lecture
Note 3. By Theorem 3 in that note we have that x 2 Core(N, v) for each . Since also
Core(N, v) is a convex m length, and (v) is a convex combination of imputation x, we
get that (v) 2 Core(N, v).

5. Power indices for simple games

In Lecture Note 1 (on cooperative games) we introduced the simple games as the class of
TU-games v such that v(S) 2 f0.1g for all coalitions S. The unanimity games eT from the
last paragraph are simple games but there are obviously many others.
In the analysis of simple games as a formalization of the power structures in a committee
it turned out to be useful to obtain an index which would tell something about each players
position in the hierarchy of power, a number between 0 and 1 so that a player without no
influence whatsoever gets the value 0 of the power index, and a dictator (whose wishes are
always the committees) has index 1. The specific numerical values of the index would then
reflect the approach towards measuring influence.
We see from the previous sections that we already have a candidate for such an index,
namely the Shapley value. If (N, v) is a simple game (so that the family of winning coalitions
is W = fS 2 Sjv(S) = 1g, we get the ith players index value is
i =

X
S:iS

(n

s)!(s
n!

1)!

[v(S)

v(S nfig].

This index is called the Shapley-Shubik power index. It has the properties of a power index
suggested above: Since the Shapley value has the dummy property, we get that a dummy,
that is a player who is not himself a winning coalition and does not change any non-winning

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coalition into a winning one by joining it, gets index value 0. Conversely, a veto player,
which belongs to all the winning coalitions and is the only one of this kind, gets the index
value 1
Besides these properties, we obviously have the axioms for the Shapley value, where in
particular the symmetry property is reasonable. But linearity no longer makes sense, since
the sum of two simple games is not necessarily simple,consider for example two unanimity
games eT and eS where T nS 6= ;, S nT 6= ;.
An axiomatic derivation of the Shapley-Shubik index therefore requires a different system
of axioms, or at least replacing the linearity with something else. A proposal for such a
replacement has been given by Dubey [You] who suggested the following property of a
general power index defined on simple games:
Axiom 5 (transfer). If v1 and v2 are simple games on N , and i 2 N , then
i (v1 _ v2 )i (v1 ^ v2 ) = i (v1 )i (v2 )
where v1 _ v2 and v1 ^ v2 is defined by, respectively V1
v1 ^ v2 (S) = minfv1 (S), v2 (S)g.

_ v2(S)

= maxfv1 (S), v2 (S)g,

Now the following holds:

Theorem 6. Let be a power index which satisfies Axioms 2 4 of the Shapley value
and Axiom 5. Then is the Shapley-Shubik index.
Another power index, which has had more applications than the Shapley-Shubik index,
is the Banzhaf-Coleman index. Like the previous one it also makes sense in the larger class
of all TU-games (only the axiomatization has to be adapted to the case under study), and we
define therefore a Banzhaf-Coleman value by the formula
i (v) =

X
SN \{i}

1
2n1

[v(S [ fig)

v(S)].

One may think of the Banzhaf-Coleman value as obtained by a consideration roughly

corresponding to the random coalition formation behind the Shapley value. However, in
the present setup each player contemplates all possible sets of future partners (and there are
2n1 sets of potential partners to be joined by the coalition formation) and takes average over
the her marginal contribution to each of them.