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Recontracting and stochastic stability in cooperative games

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  • Newton, Jonathan

Abstract

An evolutionary style model of recontracting is given which guarantees convergence to core allocations of an underlying cooperative game. Unlike its predecessors in the evolution/learning literature, this is achieved without assumptions of convexity of the characteristic function or a reliance on random errors. The stochastic stability properties of the model are then examined and it is shown that stochastically stable states solve a simple and intuitive minimization problem which reduces to maximizing a Rawlsian SWF for a common class of utility functions. In contrast to previous analyses, the stochastically stable state is unique for a broad class of utility functions.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 1 ()
Pages: 364-381

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:1:p:364-381

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Bargaining; Learning; Core; Convexity; Coalitions;

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References

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  1. Agastya, Murali, 1999. "Perturbed Adaptive Dynamics in Coalition Form Games," Journal of Economic Theory, Elsevier, vol. 89(2), pages 207-233, December.
  2. Roberto Serrano & Oscar Volij, 2003. "MISTAKE IN COOPERATION:the Stochastic Stability of Edgeworth's Recontracting," Working Papers 2003-23, Brown University, Department of Economics.
  3. Murali Agastia, . "Adaptive Play in Multiplayer Bargaining Situations," ELSE working papers 007, ESRC Centre on Economics Learning and Social Evolution.
  4. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  5. Feldman, Allan M, 1974. "Recontracting Stability," Econometrica, Econometric Society, vol. 42(1), pages 35-44, January.
  6. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
  7. Arnold, Tone & Schwalbe, Ulrich, 2002. "Dynamic coalition formation and the core," Journal of Economic Behavior & Organization, Elsevier, vol. 49(3), pages 363-380, November.
  8. Chatterjee, Kalyan & Bhaskar Dutta & Debraj Ray & Kunal Sengupta, 1993. "A Noncooperative Theory of Coalitional Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 60(2), pages 463-77, April.
  9. Green, Jerry R, 1974. "The Stability of Edgeworth's Recontracting Process," Econometrica, Econometric Society, vol. 42(1), pages 21-34, January.
  10. Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
  11. Perry, Motty & Reny, Philip J, 1994. "A Noncooperative View of Coalition Formation and the Core," Econometrica, Econometric Society, vol. 62(4), pages 795-817, July.
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Citations

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Cited by:
  1. Kevin Hasker, 2014. "The Emergent Seed: A Representation Theorem for Models of Stochastic Evolution and two formulas for Waiting Time," Levine's Working Paper Archive 786969000000000954, David K. Levine.
  2. Heinrich H. Nax & Bary S. R. Pradelski & H. Peyton Young, 2013. "The Evolution of Core Stability in Decentralized Matching Markets," Working Papers 2013.50, Fondazione Eni Enrico Mattei.
  3. Bary S.R. Pradelski, 2014. "Evolutionary Dynamics and Fast Convergence in the Assignment Game," Economics Series Working Papers 700, University of Oxford, Department of Economics.
  4. H Peyton Young & Heinrich H. Nax & Bary S.R. Pradelski, 2012. "Decentralized dynamics and equitable core selection in assignment games," Economics Series Working Papers 607, University of Oxford, Department of Economics.
  5. Newton, Jonathan & Sawa, Ryoji, 2013. "A one-shot deviation principle for stability in matching problems," Working Papers 2013-09, University of Sydney, School of Economics, revised Jul 2014.
  6. 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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