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Equilibrium Binding Agreements under Diverse Bahavioral Assumptions

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  • Effrosyni Diamantoudi

    ()
    (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper extends the work of Ray and Vohra (1997). It ascertains which partitions of players will emerge and what actions will these players choose under each partition, when they can sign binding agreements and their actions have externalities. The emphasis, however, is placed on situations with multiple outcomes and how agents behave in the presence of such multiplicity. In particular, a deviating coalition considers all the likely outcomes that may prevail upon its deviation, and selects (if possible) a subset of them, avoiding thus an excessively confident behavior, which is the case under Ray and Vohra's notion. Three augmentations of their solution concept are defined, capturing three distinct behavioral assumptions. Their efficiency and relation to each other are discussed.

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Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2001-2.

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Handle: RePEc:aah:aarhec:2001-2

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Keywords: Coalition structure; binding agreement; stability;

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  1. Effrosyni Diamantoudi, . "Equilibrium Binding Agreements under Diverse Bahavioral Assumptions," Economics Working Papers 2001-2, School of Economics and Management, University of Aarhus.
  2. Graham Elliott & Michael Jansson, . "Testing for Unit Roots with Stationary Covariates," Economics Working Papers 2000-6, School of Economics and Management, University of Aarhus.
  3. Debraj Ray & Rajiv Vohra, 1998. "A Theory of Endogenous Coalition Structures," Working Papers 98-1, Brown University, Department of Economics, revised Jan 1998.
  4. Effrosyni Diamantoudi & Licun Xue, . "Farsighted Stability in Hedonic Games," Economics Working Papers 2000-12, School of Economics and Management, University of Aarhus.
  5. Rosholm, Michael & Svarer, Michael, 2001. "Structurally Dependent Competing Risks," IZA Discussion Papers 265, Institute for the Study of Labor (IZA).
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  7. Niels Haldrup & Peter Lildholdt, . "Local Power Functions of Tests for Double Unit Roots," Economics Working Papers 2000-2, School of Economics and Management, University of Aarhus.
  8. Paul Auerbach & Peter Skott, . "Skill Asymmetries, Increasing Wage Inequality and Unemployment," Economics Working Papers 2000-18, School of Economics and Management, University of Aarhus.
  9. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
  10. Xue, Licun, 2002. "Stable agreements in infinitely repeated games," Mathematical Social Sciences, Elsevier, vol. 43(2), pages 165-176, March.
  11. Boriss Siliverstovs, . "The Bi-parameter Smooth Transition AutoRegressive model," Economics Working Papers 2000-16, School of Economics and Management, University of Aarhus.
  12. Licun Xue, 1998. "Coalitional stability under perfect foresight," Economic Theory, Springer, vol. 11(3), pages 603-627.
  13. Peter Skott, . "Demand Policy in the Long Run," Economics Working Papers 2000-17, School of Economics and Management, University of Aarhus.
  14. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
  15. Jakob Roland Munch & Michael Svarer, . "Mortality and Socio-economic Differences in a Competing Risks Model," Economics Working Papers 2001-1, School of Economics and Management, University of Aarhus.
  16. Ray, D. & Vohra, R., 1993. "Equilibrium Binding Agreements," Papers 21, Boston University - Department of Economics.
  17. Licun Xue, . "A Notion of Consistent Rationalizability - Between Weak and Pearce's Extensive Form Rationalizability," Economics Working Papers 2000-4, School of Economics and Management, University of Aarhus.
  18. Jamsheed Shorish, . "Quasi-Static Macroeconomic Systems," Economics Working Papers 2000-3, School of Economics and Management, University of Aarhus.
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Cited by:
  1. James Lake & Halis M. Yildiz, 2014. "On the different geographic characteristics of Free Trade Agreements and Customs Unions," Departmental Working Papers 1403, Southern Methodist University, Department of Economics.
  2. Albert Banal-Estañol & Inés Macho-Stadler & Jo Seldeslachts, 2004. "Mergers, Investment Decisions and Internal Organisation," Working Papers 111, Barcelona Graduate School of Economics.
  3. Effrosyni Diamantoudi, 2003. "Equilibrium binding agreements under diverse behavioral assumptions," Economic Theory, Springer, vol. 22(2), pages 431-446, 09.
  4. Sheng-Chieh Huang & Xiao Luo, 2008. "Stability, sequential rationality, and subgame consistency," Economic Theory, Springer, vol. 34(2), pages 309-329, February.
  5. Roland Pongou & Lawrence Diffo Lambo & Bertrand Tchantcho, 2008. "Cooperation, stability and social welfare under majority rule," Economic Theory, Springer, vol. 35(3), pages 555-574, June.

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