ELCE7025: Modeling and Theoretical

Analysis for Communication System

Exercise: Coalitional Games

Part I
Instructor: HOU, Fen

27/03/2020
 Exercise 1
A coalitional game with two players N={1,2} and v({1})=p
(0<p<1), v({2})=q (0<q<1), v({1,2})=1.
Question: What is the condition that make the core of the
coalitional be (a) the set with a single element; (b) the set
with multiple elements; (c)empty set.
Answer:
Let x=(x1,x2) be the payoff vector to the grand coalition.
Beside the grand coalition, we have other two coalitions, and
both of them have the value of p and q, respectively. Therefore,
the core consists of all possible payoff distribution satisfying
 (a) the core is the set with a single element.

The x coordinate of point A and B is p and 1-q, respectively. The

condition that makes the core be the set with a single element is:
p=1-q. That is, p+q=1.

x2
1
A

q B

p 1 x1
 (b) the core is the set with multiple elements.

The x coordinate of point A and B is p and 1-q,

respectively. The condition that makes the core be the set
with multiple elements is: p <1-q. That is, (p+q) <1.

x2
1
A

q B

p 1 x1
 (c) the core is empty set.

The x coordinate of point A and B is p and 1-q, respectively.

The condition that makes the core be the empty set is:
p > 1-q. That is, (p+q) >1.

x2
1
A

q B

p 1 x1
 Exercise 2
For a coalitional game with 3 players N={1,2,3}, v({1})=
v({2})= v({3})= 0 , v({1,2})=0.25 , v({1,3})=0.5 ,
v({2,3})= 0.75, v({1, 2, 3})=1. Let x = (x1,x2, x3) is a
payoff allocation solution.
Question: (a) Derive the conditions for x1, x2 and x3 that
make x= (x1, x2, x3) belongs to the core. Give an example.
(b) Give the geometric demonstration for the
core.
 Exercise 2-Solution
 For a coalitional game with 3 players N={1,2,3}, v({1})= v({2})= v({3})= 0 ,
v({1,2})=0.25 , v({1,3})=0.5 , v({2,3})= 0.75, v({1, 2, 3})=1. Let x = (x1,x2, x3)
is a payoff allocation solution.
 Question: (a) Derive the conditions for x1, x2 and x3 that make (x1, x2, x3)
belongs to the core.
Solution: The payoff allocation solution in the core
should satisfy:
x1 + x2+x3 = 1; x1 +x2 >=0.25; x1+x3 >=0.5;
x2+x3 >=0.75; x1>=0; x2>=0, x3>=0;
We can derive the condition: x1<=0.25, x2<=0.5;
x3<=0.75.
We can give an example: x=(0.2,0.5,0.3)
 Exercise 2-Solution
 Question: (b) Give the geometric demonstration for the core x=(x1,x2,x3) where x1<=0.25,
x2<=0.5; x3<=0.75.
 Solution:
 Geometric representation of the set of imputation x=(x1,x2, x2) where x1,x2, x3 >=0 and x1+x2+x3 =1.
 The set of imputations can be represented as an equilateral triangle in 2-dimentional space whose height
is 1 (e.g. v(N)).
 Three vertices of the triangle are denoted as (0,0,1), (1,0,0), and (0,1,0). Three sides are labeled as s1,
s2, and s3, respectively. A point in the triangle is denoted by x=(x1,x2,x3), where the x1,x2,and x3
represent the perpendicular distance from the point x to the three sides of the triangle s1, s2, and s3,
respectively.

A A
0,0,1 0,0,1

s2 s2 s1
h=1 s1
x=(x1,x2,x3)

1,0,0 0,1,0 1,0,0 0,1,0

s3 B s3 C
B C
 Exercise 2-Solution
 Question: (b) Give the geometric demonstration for the core x=(x1,x2,x3)
where x1<=0.25, x2<=0.5; x3<=0.75.
 Solution:
 Geometric representation of the set of imputation x=(x1,x2, x2) where x3 <=0.75.

A A
0,0,1 0,0,1
|d1d2|=0.75
d1
s1 s1 s2
s2
h=1 d3 x=(x1,x2,x3)
d2
0,1,0 1,0,0 0,1,0 1,0,0
B s3 C
B s3 C
 Exercise 2-Solution
 Geometric demonstration for the core x=(x1,x2,x3) where x1<=0.25, x2<=0.5;
x3<=0.75.

A: x=(0,0,1)

s1

s2

C: x=(0,1,0)
B: x=(1,0,0) s3
 Exercise 3
For majority game of 3 players. There are three
players N={1,2,3}, v(S)= 1 if |S| is larger or equal to
2 and 0 otherwise.
Question: (a) Solve the Shapley value of each player
(b) Does the Shapley value belong to the
core?
Exercise 3
 Exercise 3
For majority game of 3 players. There are three
players N={1,2,3}, v(S)= 1 if |S| is larger or equal to
2 and 0 otherwise.
Answer: (b) Shapley value ø(v) =(1/3,1/3,1/3) does
not belong to the core. For example, S={1,2}, the
allocation solution in Shapley value does not satisfy
the following condition.
 Exercise 4
Market with one seller and two buyers. For example, the seller
is a company which has developed a new medicine, but it
cannot produce it by itself. Therefore, the company can sell the
formula of the medicine to company 2 or company 2, or both.
The lucky company(s) will share the profit with company 1
(e.g., $1 million).
There are three players N={1,2,3} where player 1 is the seller
and players 2 and 3 are buyers. v({1,2,3})=v({1,2}) =
v({1,3})=1, and v(S)= 0 otherwise.
Question: Solve the Shapley value of each player
 Exercise 4
Market with one seller and two buyers. For example, the seller
is a company which has developed a new medicine, but it
cannot produce it by itself. Therefore, the company can sell the
formula of the medicine to company 2 or company 2, or both.
The lucky company(s) will share the profit with company 1
(e.g., $1 million).
There are three players N={1,2,3} where player 1 is the seller
and players 2 and 3 are buyers. v({1,2,3})=v({1,2}) =
v({1,3})=1, and v(S)= 0 otherwise.
Question: Solve the Shapley value of each player
Answer: ø(v) =(2/3,1/6,1/6)
Exercise 5: Land Development Game
Player 1 owns a piece of land with value of $10,000.
Player 2 can develop the land and increase its value
to $20,000
Player 3 can develop the land and increase its value
to $30,000
$30,000 is the maximum value of the land.
Question: Find the Shapley value of each player.
Exercise 6: Logistics Game
 The following figure show a logistics network that providers connectivity between two
important cities S and T. There are five logistics hubs A, B, C, D, E which are
intermediate points form S to T. Transportation is provided by service providers 1,2,3,4.
Each edge in the network is labeled by two quantities namely the service perovider and
the cost of service. For example, the label (3, 15) on the directed edge from A to B
means that service provider 3 provides the logistics service from A to B at a cost of 15
units. Assume that movement from S to T fetches a revenue of 100 units. The objective
is to choose an optimal path from S to T that maximizes the profit obtained while
moving from S to T.
 Question: (a) How to use a coalitional game to model this problem? (b) Solve the
Shapley value. (c) Does the shapley value belong to the core?
Solution:
The characteristic functions of this game:

Shapley value ø(v) =(20, 20, 5, 20)

The Shapley value belongs to the core of this game.
Exercise 5: Land Development Game
Player 1 owns a piece of land with value of $10,000.
Player 2 can develop the land and increase its value to
$20,000
Player 3 can develop the land and increase its value to
$30,000
$30,000 is the maximum value of the land.
Question: Find the Shapley value of each player.
Solution: A coalitional game with three players N={1,2,3},
v{Ø}=v({2})=v({3})=v({2,3})=0, v({1})= 10,000 and
v({1,2})= 20,000; v({1,3})= v({1,2,3})= 30,000