Shepley Has Come Up with a New Method for Distributing Rewards Among Coalition Participants

On Monday, 8 October 2012, the Royal Swedish Academy of Sciences announced that the Nobel Prize in Economics for 2012 had been awarded to US scholars Alvin E. Roth and Lloyd S. Shapley.


Alvin E. Roth is a professor at Harvard Business School, while Lloyd S. Shapley is a professor at the University of California.

Hitherto, Nobel Prizes in Economics have been awarded for various achievements in the field of economics, including for achievements in game theory. Over the years, this prize was given to a number of eminent scholars, including Robert Aumann, Reinhard Selten, John Nash, John Harsanyi, William Vickrey, James Mirrlees, Thomas Schelling, George Akerlof, Michael Spence, Eric Maskin, and Roger Myerson. However, all those scholars were highly regarded specialists who had greatly contributed to the development of non-cooperative game theory. That is, their achievements were in the field of modeling economic processes, where each of the economic agents ‘fends for himself’, and the agents do not have the right to form coalitions ensuring some rewards that can afterwards be divided among the participants.

The number of studies on non-cooperative games greatly exceeds the number of those devoted to cooperative games, and that part of game theory can be considered as the most developed one. At the same time, cooperative game theory, among other things, is intended to explain trade and economic coalitions among countries, military alliances, and the formation of various influence groups under totalitarian regimes.

Shepley has suggested that the rewards should be distributed among the participants of a coalition in proportion to the contribution that each of them has made in order to achieve the aggregate reward. This type of distribution of rewards is known as the Shepley Vector – the only theoretical entity in corporate game theory that is named after one person (the rest of them are named after author duos, with Shepley being a member of each duo: the Shepley-Volkmann lemma; the Aumann-Shepley value; the Shepley-Shubik power index). Working independently of Shepley, Alvin E. Roth carried out empirical research and greatly contributed to the development of the mechanism for matching donor organs to recipients.   

A. Yu. Knobel – Candidate of Economic Sciences, Head of the International Trade Department