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Coalitional stochastic stability

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  • Newton, Jonathan

Abstract

This paper takes the idea of coalitional behavior – groups of people occasionally acting together to their mutual benefit – and incorporates it into the framework of evolutionary game theory that underpins the social learning literature. An equilibrium selection criterion is defined which we call coalitional stochastic stability (CSS). This differs from existing work on stochastic stability in that profitable coalitional deviations are given greater importance than unprofitable single player deviations. A general characterization of CSS is given together with more detailed characterizations for specific classes of games. Applications include contracting, asymmetric social norms and collusive price setting, the latter of which is shown in some circumstances to facilitate competitive outcomes.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 75 (2012)
Issue (Month): 2 ()
Pages: 842-854

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Handle: RePEc:eee:gamebe:v:75:y:2012:i:2:p:842-854

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: Stochastic stability; Learning; Coalition; Lexicographic; Contract;

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Cited by:
  1. Hwang, Sung-Ha & Newton, Jonathan, 2014. "A classification of bargaining solutions by evolutionary origin," Working Papers 2014-02, University of Sydney, School of Economics, revised Apr 2014.

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