Frank Huettner

Articles, Academic articles

Journal Article
Forthcoming

Consumer choice under limited attention when alternatives have different information costs

Operations Research
Frank Huettner, Tamer Boyaci, Yalçın Akçay
Abstract:
Subject(s): Product and operations management
Keyword(s): Discrete choice, rational inattention, information acquisition, non-uniform information costs, market inference
JEL Code(s): D40, D80

Consumers often do not have complete information about the choices they face and therefore have to spend time and effort in acquiring information. Since information acquisition is costly, consumers trade-off the value of better information against its cost, and make their final product choices based on imperfect information. We model this decision using the rational inattention approach and describe the rationally inattentive consumer’s choice behavior when she faces alternatives with different information costs. To this end, we introduce an information cost function that distinguishes between direct and implied information. We then analytically characterize the optimal choice probabilities. We find that non-uniform information costs can have a strong impact on product choice, which gets particularly conspicuous when the product alternatives are otherwise very similar. There are significant implications on how a seller should provide information about its products and how changes to the product set impacts consumer choice. For example, non-uniform information costs can lead to situations where it is disadvantageous for the seller to provide easier access to information for a particular product, and to situations where the addition of an inferior (never chosen) product increases the market share of another existing product (i.e., failure of regularity). We also provide an algorithm to compute the optimal choice probabilities and discuss how our framework can be empirically estimated from suitable choice data.

© 2018, INFORMS


Journal Article

Decomposition of solutions and the Shapley value

Games and Economic Behavior 108 (March 2018): 37–48
André Casajus, Frank Huettner (2018)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Decomposition, Shapley value, Potential, Consistency, Higher-order contributions, Balanced contributions
JEL Code(s): C71, D60

We suggest foundations for the Shapley value and for the naïve solution, which assigns to any player the difference between the worth of the grand coalition and its worth after this player left the game. To this end, we introduce the decomposition of solutions for cooperative games with transferable utility. A decomposer of a solution is another solution that splits the former into a direct part and an indirect part. While the direct part (the decomposer) measures a player's contribution in a game as such, the indirect part indicates how she affects the other players' direct contributions by leaving the game. The Shapley value turns out to be unique decomposable decomposer of the naïve solution.

With permission of Elsevier

Volume 108
Issue March 2018
Pages 37–48

Journal Article

On the existence of efficient and fair extensions of communication values for connected graphs

Economics Letters 146 (9): 103–106
Sylvain Béal, André Casajus, Frank Huettner (2016)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Shapley value, potential, random partition, concentration of power, communication graph, fairness, efficiency, efficient extension, fair extension, Myerson value
JEL Code(s): C71, D60

We study values for TU games with a communication graph (CO-values). In particular, we show that CO-values for connected graphs that are fair and efficient allow for a unique efficient and fair extension to the full domain.

With permission of Elsevier

Volume 146
Issue 9
Pages 103–106

Journal Article

Characterizations of weighted and equal division values

Theory and Decision 80 (4): 649–667
Sylvain Béal, André Casajus, Frank Huettner, Eric Rémila, Philippe Solal (2016)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Equal division, weighted division values, non-negative player, addition invariance on bi-partitions, nullified solidarity
Volume 80
Issue 4
Pages 649–667

Journal Article

Efficient extensions of the Myerson value

Social Choice and Welfare 45 (5): 819–827
Sylvain Béal, André Casajus, Frank Huettner (2015)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
JEL Code(s): C71, D60
Volume 45
Issue 5
Pages 819–827

Journal Article

Potential, value, and the multilinear extension

Economics Letters 135: 28–30
André Casajus, Frank Huettner (2015)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Shapley value, potential, random partition, concentration of power
JEL Code(s): C71

We provide new formulae for the potential of the Shapley value that use the multilinear extension of coalitional games with transferable utility.

With permission of Elsevier

Volume 135
Pages 28–30

Journal Article

A proportional value for cooperative games with a coalition structure

Theory and Decision 78 (2): 273–287
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Shapley value, Owen value, proportional value, consistency
Volume 78
Issue 2
Pages 273–287

Journal Article

Solidarity within a fixed community

Economics Letters 125 (3): 440–443
Sylvain Béal, André Casajus, Frank Huettner, Eric Rémila, Philippe Solal (2014)
Abstract:
Subject(s): Economics, politics and business environment, Management sciences, decision sciences and quantitative methods
Keyword(s): Equal division value, nullified solidarity, weak fairness, population solidarity
JEL Code(s): C71, D60

We study the consequences of a solidarity property that specifies how a value for cooperative games should respond if some player forfeits his productivity, i.e., becomes a null player. Nullified solidarity states that in this case either all players weakly gain together or all players weakly lose together. Combined with efficiency, the null game property, and a weak fairness property, we obtain a new characterization of the equal division value.

Volume 125
Issue 3
Pages 440–443

Journal Article

Weakly monotonic solutions for cooperative games

Journal of Economic Theory 154: 162–172
André Casajus, Frank Huettner (2014)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Egalitarian Shapley values, redistribution, solidarity, TU games, weak monotonicity
JEL Code(s): C71, D60

The principle of weak monotonicity for cooperative games states that if a game changes so that the worth of the grand coalition and some player's marginal contribution to all coalitions increase or stay the same, then this player's payoff should not decrease. We investigate the class of values that satisfy efficiency, symmetry, and weak monotonicity. It turns out that this class coincides with the class of egalitarian Shapley values. Thus, weak monotonicity reflects the nature of the egalitarian Shapley values in the same vein as strong monotonicity reflects the nature of the Shapley value. An egalitarian Shapley value redistributes the Shapley payoffs as follows: First, the Shapley payoffs are taxed proportionally at a fixed rate. Second, the total tax revenue is distributed equally among all players.

With permission of Elsevier

Volume 154
Pages 162–172

Journal Article

On a class of solidarity values

European Journal of Operational Research 236 (2): 583–591
André Casajus, Frank Huettner (2014)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Solidarity, null player out, desirability, positivity, asymptotic equivalence

We suggest a new one-parameter family of solidarity values for TU-games. The members of this class are distinguished by the type of player whose removal from a game does not affect the remaining players’ payoffs. While the Shapley value and the equal division value are the boundary members of this family, the solidarity value is its center. With exception of the Shapley value, all members of this family are asymptotically equivalent to the equal division value in the sense of Radzik (2013).

With permission of Elsevier

Volume 236
Issue 2
Pages 583–591

Journal Article

Null, nullifying, or dummifying players: The difference between the Shapley value, the equal division value, and the equal surplus division value

Economics Letters 122 (2): 167–169
André Casajus, Frank Huettner (2014)
Abstract:
Subject(s): Economics, politics and business environment, Management sciences, decision sciences and quantitative methods
Keyword(s): Solidarity, nullifying player, dummifying player, equal division value, equal surplus division value, ,monotonicity
JEL Code(s): C71, D63

We provide new characterisations of the equal surplus division value. This way, the difference between the Shapley value, the equal surplus division value, and the equal division value is pinpointed to one axiom.

With permission of Elsevier

Volume 122
Issue 2
Pages 167–169

Journal Article

Null players, solidarity, and the egalitarian Shapley values

Journal of Mathematical Economics 49 (1): 58–61
André Casajus, Frank Huettner (2013)
Abstract:
Subject(s): Economics, politics and business environment, Management sciences, decision sciences and quantitative methods
Keyword(s): Solidarity, egalitarian Shapley value, equal division value, desirability, strong differential monotonicity

The Shapley value probably is the most eminent single-point solution concept for TU-games. In its standard characterization, the null player property indicates the absence of solidarity among the players. First, we replace the null player property by a new axiom that guarantees null players non-negative payoffs whenever the grand coalition’s worth is non-negative. Second, the equal treatment property is strengthened into desirability. This way, we obtain a new characterization of the class of egalitarian Shapley values, i.e., of convex combinations of the Shapley value and the equal division solution. Within this characterization, additivity and desirability can be replaced by strong differential monotonicity, which translates higher productivity differentials into higher payoff differentials.

With permission of Elsevier

Volume 49
Issue 1
Pages 58–61

Journal Article

Axiomatic arguments for decomposing goodness of fit according to Shapley and Owen values

Electronic Journal of Statistics 6: 1239–1250
Frank Huettner, Marco Sunder (2012)
Abstract:
Subject(s): Management sciences, decision sciences and quantitative methods
Keyword(s): Shapley value, Owen value, variance decomposition, regression games, GSOEP

We advocate the decomposition of goodness of fit into contributions of (groups of) regressor variables according to the Shapley value or—if regressors are exogenously grouped— the Owen value because of the attractive axioms associated with these values. A wage regression model with German data illustrates the method.

Volume 6
Pages 1239–1250

Working papers

ESMT Working Paper

Consumer choice under limited attention when alternatives have different information costs

ESMT Working Paper No. 16-04 (R3)
Frank Huettner, Tamer Boyaci, Yalçın Akçay (2018)
Abstract:
Subject(s): Product and operations management
Keyword(s): Discrete choice, rational inattention, information acquisition, non-uniform information costs, market inference
JEL Code(s): D40, D80

Consumers often do not have complete information about the choices they face and therefore have to spend time and effort in acquiring information. Since information acquisition is costly, consumers trade-off the value of better information against its cost, and make their final product choices based on imperfect information. We model this decision using the rational inattention approach and describe the rationally inattentive consumer’s choice behavior when she faces alternatives with different information costs. To this end, we introduce an information cost function that distinguishes between direct and implied information. We then analytically characterize the optimal choice probabilities. We find that non-uniform information costs can have a strong impact on product choice, which gets particularly conspicuous when the product alternatives are otherwise very similar. There are significant implications on how a seller should provide information about its products and how changes to the product set impacts consumer choice. For example, non-uniform information costs can lead to situations where it is disadvantageous for the seller to provide easier access to information for a particular product, and to situations where the addition of an inferior (never chosen) product increases the market share of another existing product (i.e., failure of regularity). We also provide an algorithm to compute the optimal choice probabilities and discuss how our framework can be empirically estimated from suitable choice data.

Pages 52
Publication Nr. 16-04 (R3)
ISSN 1866–3494 (Print)

ESMT Working Paper

The Coleman-Shapley-index: Being decisive within the coalition of the interested

ESMT Working Paper No. 18-03
André Casajus, Frank Huettner (2018)
Abstract:
Subject(s): Economics, politics and business environment, Management sciences, decision sciences and quantitative methods
Keyword(s): Decomposition, Shapley value, Shapley-Shubik index, power index, Coleman Power of the Collectivity to Act, Penrose-Banzhaf index, EU Council, UN Security Council
JEL Code(s): C71, D60

The Coleman Power of the Collectivity to Act (CPCA) is a popular statistic that reflects the ability of a committee to pass a proposal. Applying the Shapley value to this measure, we derive a new power index that indicates each voter's contribution to the CPCA. This index is characterized by four axioms: anonymity, the null voter property, transfer property, and a property that stipulates that sum of the voters' power equals the CPCA. Similar to the Shapley-Shubik index (SSI) and the Penrose-Banzhaf index (PBI), our new index emerges as the expectation of being a pivotal voter. Here, the coalitional formation model underlying the CPCA and the PBI is combined with the ordering approach underlying the SSI. In contrast to the SSI, the voters are not ordered according to their agreement with a potential bill but according to their vested interest in it. Among the most interested voters, the power is then measured in a similar way as with the PBI. Although we advocate the CSI against the PBI to capture a voter's influence on whether a proposal passes, the CSI gives new meaning to the PBI. The CSI is the decomposer of the PBI, splitting it into a voter's power as such and as her impact on the power of the other voters by threatening to block any proposal. We apply the index to the EU Council and the UN Security Council.

Pages 22
Publication Nr. 18-03
ISSN 1866–3494 (Print)