SteveSteve

and

EvanEvan

are students at Berkeley College. They share an apartment that is owned by

EvanEvan.

EvanEvan

is considering subscribing to an Internet provider that has the following packages available:

Package		Per Month
A.	Internet access		$85
B.	Phone services		15
C.	Internet access + phone services		90

spends most of his time on the Internet ("everything can be found online now").

EvanEvan

prefers to spend his time talking on the phone rather than using the Internet ("going online is a waste of time"). They agree that the purchase of the

$ 90$90

total package is a

"win dash win""winwin"

situation.

Requirements

1.	Allocate the $ 90$90 between SteveSteve and EvanEvan using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method.
2.	Which method would you recommend they use and why?

Requirement 1. Allocate the

$ 90$90

between

SteveSteve

and

EvanEvan

using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. (Round your answers to the nearest cent.)

	Costs allocated to
	Steve	Evan
(a) Stand-alone	76.5	13.5
(b) Incremental
Steve primary user	85	5
Evan primary user
(c) Shapley

Requirement 2. Which method would you recommend they use and why?

I would recommend the

Shapley value method

incremental method

Shapley value method

stand-alone method

.

It is fairer than the

incremental method

Shapley value method

stand-alone method

which

. It allocates costs in a manner that is close to the costs allocated under the

incremental method

Shapley value method

stand-alone method

but takes a more comprehensive view of the common cost allocation problem by considering

incremental users only

primary and incremental users

primary users only.

Steve and Evan are students at Berkeley College. They share an apartment that is owned by Evan. Evan is considering subscribing to an Internet provider that has the following packages available: Package A. Internet access B. Phone services C. Internet access + phone services Per Month $ 85 15 90 Steve spends most of his time on the Internet ("everything can be found online now"). Evan prefers to spend his time talking on the phone rather than using the Internet ("going online is a waste of time"). They agree that the purchase of the $90 total package is a "win-win situation. Requirements 1. Allocate the $90 between Steve and Evan using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. 2. Which method would you recommend they use and why? Requirement 1. Allocate the $90 between Steve and Evan using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. (Round your answers to the nearest cent.) Costs allocated to Steve Evan 76.5 13.5 (a) Stand-alone (b) Incremental Steve primary user Evan primary user (C) Shapley Requirement 2. Which method would you recommend they use and why? I would recommend the Shapley value method . It allocates costs in a manner that is close to the costs allocated under the but takes a It is fairer than the which more comprehensive view of the common cost allocation problem by considering Steve and Evan are students at Berkeley College. They share an apartment that is owned by Evan. Evan is considering subscribing to an Internet provider that has the following packages available: Package A. Internet access B. Phone services C. Internet access + phone services Per Month $ 85 15 90 Steve spends most of his time on the Internet ("everything can be found online now"). Evan prefers to spend his time talking on the phone rather than using the Internet ("going online is a waste of time"). They agree that the purchase of the $90 total package is a "win-win situation. Requirements 1. Allocate the $90 between Steve and Evan using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. 2. Which method would you recommend they use and why? Requirement 1. Allocate the $90 between Steve and Evan using (a) the stand-alone cost-allocation method, (b) the incremental cost-allocation method, and (c) the Shapley value method. (Round your answers to the nearest cent.) Costs allocated to Steve Evan 76.5 13.5 (a) Stand-alone (b) Incremental Steve primary user Evan primary user (C) Shapley Requirement 2. Which method would you recommend they use and why? I would recommend the Shapley value method . It allocates costs in a manner that is close to the costs allocated under the but takes a It is fairer than the which more comprehensive view of the common cost allocation problem by considering