Sharing the proceeds from a hierarchical venture when agents have needs

2026-04-20

AI Summary

This study addresses the problem of allocating collective surplus in hierarchical organizations when agents have heterogeneous basic needs. To ensure that total revenue is distributed fairly only after all parties’ essential requirements are met, the paper proposes two novel classes of allocation rules: one based on either aggregating net surplus upward through the hierarchy or equally sharing it between each agent and their immediate superior, and another comprising a family of geometric and sequential rules adjusted for individual needs. Employing axiomatic analysis and mechanism design theory, the work fully characterizes allocation mechanisms that simultaneously satisfy fairness, efficiency, and hierarchical consistency, thereby achieving a theoretically coherent integration of individual needs with organizational structure.

Technology Category

• Multiagent Systems: Mechanism Design
• Game Theory and Economic Paradigms: Fair Division
• Search and Optimization: Distributed Search

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• User Modeling, Personalization and Recommendation: Fairness-aware retrieval and ranking
• Graph Algorithms and Modeling for the Web: Algorithms and analysis for heterogeneous, signed, attributed, multi-relational, temporal, higher-order, and annotated Web-related graphs

Abstract

We consider a setting in which a set of agents are hierarchically organized for a joint venture. They each generate revenues for the joint venture and have individual needs to cover. The aim is to distribute aggregate revenues appropriately. We characterize a family of need-adjusted geometric rules where the net revenue (after covering needs) "bubbles up" in the hierarchy, as well as a need-adjusted serial rule in which the net revenue is equally shared among each agent and his predecessors in the hierarchy.

Problem

• hierarchical venture
• revenue sharing
• individual needs
• need-adjusted allocation
• cooperative distribution

Innovation

• need-adjusted allocation
• hierarchical organization
• revenue sharing
• geometric rule
• serial rule