Cost Sharing in a Condo Under Law’s Umbrella

Abstract

How to share the cost of an improvement in a condo? In France, as in most European civil law countries, the law does not provide any precise method for answering this question. This vagueness of the law calls for further investigation. Focusing on how to distribute costs that are collectively incurred by a group of players, cooperative game theory is a priori an appropriate framework for dealing with this topic. In this theory, the Shapley value is a widely used cost-sharing method. We analyze the interest of using this concept to solve our problem by considering the case of a three-storey condo. We show that taking into account the legal requirement that any decision concerning improvements be made by a majority of the votes affects the characteristic function of the game. We then identify a pitfall of the Shapley value: it almost never receives an affirmative vote from the co-owner association.