Fair Allocation in Crowd-Sourced Systems

Abstract: In this paper, we address the problem of fair sharing of the total value of a crowd-sourced network system between major participants (founders) and minor participants (crowd) using cooperative game theory. Shapley allocation is regarded as a fair way for computing the shares of all participants in a cooperative game when the values of all possible coalitions could be quantified. We define a class of value functions for crowd-sourced systems which capture the contributions of the founders and the crowd plausibly and derive closed-form expressions for Shapley allocations to both. These value functions are defined for different scenarios, such as presence of oligopolies or geographic spread of the crowd, taking network effects, including Metcalfe's law, into account. A key result we obtain is that under quite general conditions, the crowd participants are collectively owed a share between $\frac{1}{2}$ to $\frac{2}{3}$ of the total value of the crowd-sourced system. We close with an empirical analysis demonstrating consistency of our results with the compensation offered to the crowd participants in some public internet content sharing companies.