This paper reconsiders the literature on non-cooperative foundations of cooperative solutions. The goal of non-cooperative foundations is to provide credible non-cooperative models of negotiation and coalition formation whose equilibrium outcomes agree with a given cooperative solution. Here we argue that this goal is best achieved by explicitly modeling the physical environment and individual preferences, and constructing game forms {independent of preferences} to implement the cooperative solution. In addition, the game form should reflect salient aspects of negotiation. We propose a general model (called a {strategic environment}) of the physical environment; we characterize the coalitional functions arising from strategic environments; we demonstrate our approach for the case of the core; and we provide conditions under which core payoffs correspond to payoffs from core outcomes.
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number
964.
Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
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