The SHAPLEY.lng Model

Shapley value for players in a Coalition

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Suppose customers A, B, and C, are each to receive a delivery from a single truck that makes one trip to serve the three. How should the cost of the trip be allocated? The Shapley value allocates cost to a given customer based upon the average marginal cost of adding that customer to the trip/coalition, where the average is taken over all possible permutations of how customers/players could be added to the trip/coalition. Suppose the cost of delivering to any combination of the three is as follows: (A) $88, (B): $92, (C): $70, (A,B): $100, (A,C): $119, (B,C): $112, (A,B,C): $120. E.g., making a single trip to just A and C costs $119. Making one trip that serves all three costs $120.

Keywords:

Game Theory | Shapley value | Cooperative Game | N-person game |