Your group reinvented the Shapley value
Here is the part that should raise an eyebrow. In 1953, Lloyd Shapley
asked what it would mean to divide the gains of a joint enterprise
fairly, and answered with a short list of requirements so mild they read
like table manners. The remarkable result is that anyone who accepts the
requirements is committed to exactly one division — now
called the Shapley value, and applied ever since to splitting shared
costs. To use it on a dinner bill you have to model the bill, and the
natural model is the obvious one: each line item is a separate cost,
owed jointly by the people who consumed it, and the bill is just the sum
of its lines. In that model, the requirements say:
The bill gets paidEveryone’s shares add up to the total on the check—no more, no less.
Equals pay equallyTwo people who consumed the same things owe the same amount.
No bystander paysIf you consumed none of an item, you owe none of it.
Items add upSplitting the whole bill gives the same answer as splitting item by item and summing your pieces.
Apply those rules to that model of the receipt and the unique answer
falls out:
every item splits equally among the people who consumed it, and
your total is the sum of your pieces. Now look at what that
means for the mixed bill — personal extras plus a shared-by-everyone
base. Each extra is “consumed” by exactly one person, so it
lands entirely on them. The shared base is consumed by the whole table,
so it splits evenly. Subtract the extras, split the rest, add them back:
the folk method is the Shapley value of the bill, whenever the
base really is shared by everyone. “Fair” here means exactly
that — the one division consistent with those four requirements,
not a verdict handed down from outside them.
A folk rule turning out to be exactly the game-theoretic answer has a
precedent. In 1973, Littlechild and Owen proved that a simple rule
already proposed for setting airport landing fees — every plane
shares the cost of the runway stretch it uses, so the section all planes
need splits among everyone while each extension is shared only by the
bigger planes that require it — generates precisely the Shapley
value of the airport’s cost game. The cost structure differs from
a dinner bill, but the shape of the result is the same: what everyone
uses splits among everyone; what only some need is theirs to carry. Your
table’s cocktail policy has the same pedigree as an airport’s
fee schedule. So does a private
room’s minimum-spend shortfall: the floor everyone’s reservation
created splits per seat, and the orders above it split by item.
Sources: A Value for n-Person Games, Princeton University Press, 1953; A Simple Expression for the Shapley Value in a Special Case, Management Science, 1973