Truth-telling and Nash equilibria in minimum cost spanning tree models

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In this paper we consider the minimum cost spanning tree model. We assume that a central planner aims at implementing a minimum cost spanning tree not knowing the true link costs. The central planner sets up a game where agents announce link costs, a tree is chosen and costs are allocated according to the rules of the game. We characterize ways of allocating costs such that true announcements constitute Nash equilibria both in case of full and incomplete information. In particular, we find that the Shapley rule based on the irreducible cost matrix is consistent with truthful announcements while a series of other well-known rules (such as the Bird-rule, Serial Equal Split, and the Proportional rule) are not.
Original languageEnglish
JournalEuropean Journal of Operational Research
Volume222
Issue number3
Pages (from-to)566-570
Number of pages5
ISSN0377-2217
DOIs
Publication statusPublished - 2012

ID: 38252493