Subsidy Allocation as a Coalition Game

The City of Prague allocates a part of its budget to the city districts in the form of subsidies. The objective of the City of Prague is to find such a set of criteria and their weights that estimate in the best way the expected cost of public administration. The objective of city district is subsidy maximization by influencing the criteria and their weights. The change of allocation rules requires that the city district is able to form a coalition of city districts with majority of votes. The strength of each city districts is evaluated by the number of members of the Prague City Assembly coming from the given city district. The conflict between the city districts is studied as a coalition game. The illustrative calculations for the 2013 subsidy allocation are presented.