A Fair Gain-Sharing Solution of Cooperative Dynamic Games

This paper develops a novel dynamic fair gain-sharing cooperative solution that satisfies individual rationality, group optimality, time consistency, and fair-sharing property. A fair gain-sharing principle of cooperative gain is critical to obtaining the agreement of all players to cooperate and the scheme’s sustainability. In particular, the distribution of the cooperative gains reflects the contributions of players. This choice is guided by economic rationality-based arguments and is perceived as fair. An application example in environmental management is provided.