The Core of a Normal Form Game
AbstractDue to the externalities, in normal form games a deviation changes the payoff of all players inducing a retaliation by the remaining or residual players. The stability of an outcome depends on the expectations potential deviators have about this reaction, but so far no satisfactory theory has been provided. The present paper continues the work of Chander and Tulkens (1997) where deviators consider residual equilibria, but we allow coalitions to form, moreover introduce consistency between the residual solution and the solution of the original game. Optimistic and pessimistic considerations produce a pair of cores. These cores are compared to some existing cooperative concepts such as the gamma- and r-cores and the equilibrium binding agreements. In our final section we discuss the predominance of the grand coalition and suggest a generalisation of the normal form where such a precedence can be removed.
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Bibliographic InfoPaper provided by EconWPA in its series Game Theory and Information with number 0302002.
Length: 22 pages
Date of creation: 17 Feb 2003
Date of revision:
Note: Type of Document - LaTeX; prepared on MikTeX-WinEdt on PC; to print on PostScript; pages: 22 ; figures: none. Comments welcome!
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externalities; residual game; cohesiveness; partition function;
Other versions of this item:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-02-24 (All new papers)
- NEP-GTH-2003-02-24 (Game Theory)
- NEP-IND-2003-02-24 (Industrial Organization)
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