Cooperation in Capital Deposits

P.E.M. Borm, A.M.B. De Waegenaere, C. Rafels, J.P.M. Suijs, S.H. Tijs, J.B. Timmer

Research output: Working paperDiscussion paperOther research output

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Abstract

The rate of return earned on a deposit can depend on its term, the amount of money invested in it, or both. Most banks, for example, offer a higher interest rate for longer term deposits. This implies that if one individual has capital available for investment now, but needs it in the next period, whereas the opposite holds for another individual, then they can both benefit from cooperation since it allows them to invest in a longer term deposit. A similar situation arises when the rate of return on a deposit depends on the amount of capital invested in it. Although the benefits of such cooperative behavior may seem obvious to all individuals, the actual participation of an individual depends on what part of the revenues he eventually receives. The allocation of the jointly earned benefits to the investors thus plays an important part in the stability of the cooperation. This paper provides a game theoretical analysis of this allocation problem. Several classes of corresponding deposit games are introduced. For each class, necessary conditions for a nonempty core are provided, and allocation rules that yield core-allocations are examined.
Original languageEnglish
Place of PublicationTilburg
PublisherOperations research
Number of pages21
Volume1999-31
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-31

Fingerprint

Deposits
Rate of return
Theoretical analysis
Participation
Investors
Cooperative behavior
Allocation problem
Interest rates
Allocation rules
Revenue
Core allocation

Keywords

  • Cooperative game theory
  • capital deposits.

Cite this

Borm, P. E. M., De Waegenaere, A. M. B., Rafels, C., Suijs, J. P. M., Tijs, S. H., & Timmer, J. B. (1999). Cooperation in Capital Deposits. (CentER Discussion Paper; Vol. 1999-31). Tilburg: Operations research.
Borm, P.E.M. ; De Waegenaere, A.M.B. ; Rafels, C. ; Suijs, J.P.M. ; Tijs, S.H. ; Timmer, J.B. / Cooperation in Capital Deposits. Tilburg : Operations research, 1999. (CentER Discussion Paper).
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abstract = "The rate of return earned on a deposit can depend on its term, the amount of money invested in it, or both. Most banks, for example, offer a higher interest rate for longer term deposits. This implies that if one individual has capital available for investment now, but needs it in the next period, whereas the opposite holds for another individual, then they can both benefit from cooperation since it allows them to invest in a longer term deposit. A similar situation arises when the rate of return on a deposit depends on the amount of capital invested in it. Although the benefits of such cooperative behavior may seem obvious to all individuals, the actual participation of an individual depends on what part of the revenues he eventually receives. The allocation of the jointly earned benefits to the investors thus plays an important part in the stability of the cooperation. This paper provides a game theoretical analysis of this allocation problem. Several classes of corresponding deposit games are introduced. For each class, necessary conditions for a nonempty core are provided, and allocation rules that yield core-allocations are examined.",
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Borm, PEM, De Waegenaere, AMB, Rafels, C, Suijs, JPM, Tijs, SH & Timmer, JB 1999 'Cooperation in Capital Deposits' CentER Discussion Paper, vol. 1999-31, Operations research, Tilburg.

Cooperation in Capital Deposits. / Borm, P.E.M.; De Waegenaere, A.M.B.; Rafels, C.; Suijs, J.P.M.; Tijs, S.H.; Timmer, J.B.

Tilburg : Operations research, 1999. (CentER Discussion Paper; Vol. 1999-31).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

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AU - De Waegenaere, A.M.B.

AU - Rafels, C.

AU - Suijs, J.P.M.

AU - Tijs, S.H.

AU - Timmer, J.B.

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AB - The rate of return earned on a deposit can depend on its term, the amount of money invested in it, or both. Most banks, for example, offer a higher interest rate for longer term deposits. This implies that if one individual has capital available for investment now, but needs it in the next period, whereas the opposite holds for another individual, then they can both benefit from cooperation since it allows them to invest in a longer term deposit. A similar situation arises when the rate of return on a deposit depends on the amount of capital invested in it. Although the benefits of such cooperative behavior may seem obvious to all individuals, the actual participation of an individual depends on what part of the revenues he eventually receives. The allocation of the jointly earned benefits to the investors thus plays an important part in the stability of the cooperation. This paper provides a game theoretical analysis of this allocation problem. Several classes of corresponding deposit games are introduced. For each class, necessary conditions for a nonempty core are provided, and allocation rules that yield core-allocations are examined.

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Borm PEM, De Waegenaere AMB, Rafels C, Suijs JPM, Tijs SH, Timmer JB. Cooperation in Capital Deposits. Tilburg: Operations research. 1999. (CentER Discussion Paper).