Transferable utility
The assumption that a group's winnings come in a single divisible good that members can pass between themselves at a one for one rate.
Often misread asReading it as the claim that players value money identically or that money is all they care about, rather than as the requirement that a transfer moves worth at a fixed one for one rate.
How to see it
A pound moved is a unit gained, exactly
The assumption is that whatever a group wins arrives as something like money, which members can pass between themselves pound for pound with nothing lost and nothing gained in the passing. That is what lets a group's prospects be summarised by one number instead of a whole set of achievable splits.
The checkWhat is needed is that a pound taken from me adds exactly one unit to you. Players may want quite different things; what they may not have is diminishing value in the transferable good.
Try itTwo partners divide a hundred pounds and one of them is strongly risk averse in money. Ask whether a pound moved across still adds exactly one unit of worth. If not, the shortcut of one number per coalition is unavailable and you need the non transferable version.
Know these first
Leads on to
Easily confused with
Sources
- von Neumann, J. & Morgenstern, O. (1944). Princeton UP.
- Osborne, M. & Rubinstein, A. (1994). MIT Press.
- Myerson, R. (1991). Harvard University Press.