A Game-theoretic Analysis of Cost Allocations Associated with a Shift of a Social System

Abstract

A shift of a social system may possibly be prevented by conflicts among participants with respect to cost allocations associated with the shift, even if the new system is much more beneficial than the present system. For instance, a shift of the pension system in Japan from pay-as-you-go system to funded system is not achieved partly because there is supposed to be a cost allocation conflict among generations. In this study, a cost allocation conflict associated with a social system shift is modeled as a normal-form game, and best responses of each player and equilibria are investigated. Conditions under which whole cost is allocated and the social system shift is achieved are examined.