| Abstract: | In an economic environment where there is a conflict of interest among several parties, the job of an adjudicator is to devise a “solution” to this conflict that is “fair” or at least acceptable to all parties. For example, a cost accountant may have to allocate the cost of a research and development division or of a common power facility to several departments—each of which makes some use of the facility. Perhaps, several firms responsible for the pollution of a lake or river may be under a court order to clean up the lake, and he must decide how to distribute this cost among the several firms. The purpose of this paper is to illustrate through the above two examples how the theory of cooperative games may be of service to such an adjudicator. However, there are several different notions of “fairness,” and the decision as to which notion of “fairness” is appropriate to which conflict situation is a decision that at this point is beyond the theory of cooperative games. By examining these different notions of fairness, a person may find himself able to distinguish features of various solution proposals which make one solution “fairer” than another. |
