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Subgame-perfect cooperation in an extensive game

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  • Chander, Parkash
  • Wooders, Myrna

Abstract

We propose a new solution concept for games in extensive form that incorporates both cooperation and subgame perfection. From its definition and properties, the new solution concept, named the subgame-perfect core, is a refinement of the core of an extensive game in the same sense as the set of subgame-perfect Nash equilibria is a refinement of the set of Nash equilibria. To further characterize the subgame-perfect core, we show that each subgame-perfect core payoff vector can be implemented as a non-cooperative solution, as it is a subgame-perfect Nash equilibrium payoff vector of an extensive form game that is closely related to the original game. We also motivate and introduce a related concept of subgame-perfect strong Nash equilibrium of an extensive game that is coalition proof.

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  • Chander, Parkash & Wooders, Myrna, 2020. "Subgame-perfect cooperation in an extensive game," Journal of Economic Theory, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:jetheo:v:187:y:2020:i:c:s0022053120300223
    DOI: 10.1016/j.jet.2020.105017
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    Cited by:

    1. Roberto Serrano, 2020. "Sixty-Seven Years of the Nash Program: Time for Retirement?," Working Papers 2020-20, Brown University, Department of Economics.
    2. Roberto Serrano, 2021. "Sixty-seven years of the Nash program: time for retirement?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(1), pages 35-48, March.
    3. Giorgos Stamatopoulos, 2021. "On the core of economies with multilateral environmental externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 158-171, February.
    4. Ehud Lehrer & Marco Scarsini, 2013. "On the Core of Dynamic Cooperative Games," Dynamic Games and Applications, Springer, vol. 3(3), pages 359-373, September.
    5. Chander, Parkash, 2017. "Subgame-perfect cooperative agreements in a dynamic game of climate change," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 173-188.
    6. Wang, Ying, 2021. "Fund-raising and Allocation of Green Climate Fund: Taking Global Pareto Optimality and Fiscal Balance into Consideration," MPRA Paper 106861, University Library of Munich, Germany.

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    More about this item

    Keywords

    Extensive game; Subgame perfection; Coalitional game; Centipede game; Bargaining game; Coalition-proof Nash equilibrium;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other

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