Game Theory | Shapley Value Step-by-Step | Excel Example – Part 1

In this lecture, we apply cooperative game theory and the Shapley Value to a practical multi-party infrastructure project involving three participating firms. The example considers a power-sector project in which Civil, Electrical & Mechanical (E&M), and SCADA/AMI partners contribute differently to the overall project. The lecture explains how coalition values can be used to determine the contribution of each participant and how the Shapley Value provides a systematic and fair approach for allocating the value created through cooperation. In Part 1, we develop the practical problem, construct the characteristic function, identify the possible coalitions, and begin calculating the marginal contributions across all possible orders of participation. This lecture is particularly useful for students and professionals studying: Game Theory Cooperative Game Theory Shapley Value Operations Research Project Management Operations Management Decision Analysis Resource Allocation Multi-party collaboration and conflict resolution The calculations are demonstrated step by step using an Excel-based practical example. Time stamps: 00:00 Introduction – Game Theory in Practice 01:00 Power-Sector Infrastructure Project and Its Participants 02:00 Understanding the Multi-Party Conflict 03:00 Introducing the Shapley Value 04:00 Coalition Formation and Coalition Values 05:30 Characteristic Function of the Cooperative Game 07:30 Moving from the Problem to Shapley Value Calculation 09:00 Number of Possible Orders: n = 3 and 3! = 6 10:00 Listing the Six Possible Participation Orders 12:00 Understanding Marginal Contributions 13:00 Constructing the Marginal Contribution Framework 14:30 Calculating Marginal Contributions Step by Step 17:00 Entering the Calculations in Excel 19:00 Reviewing the Calculations and Preparing for the Next Step #gametheory #ShapleyValue #CooperativeGameTheory #operationsresearch #projectmanagement #operationsmanagement #DecisionAnalysis #resourceallocation #GameTheoryInPractice #quantitativeanalysis