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The Core in a Normal Form Game

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  • László Á. Kóczy

    (Catholic University Leuven)

Abstract

Due 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 Tulkens and Chander (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 g- 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.

Suggested Citation

  • László Á. Kóczy, 2002. "The Core in a Normal Form Game," Economics Bulletin, AccessEcon, vol. 28(9), pages 1.
    • Handle: RePEc:ebl:ecbull:eb-02aa0012
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    References listed on IDEAS

    as
    1. Ichiishi, Tatsuro, 1981. "A Social Coalitional Equilibrium Existence Lemma," Econometrica, Econometric Society, vol. 49(2), pages 369-377, March.
    2. R.J. Aumann & S. Hart (ed.), 2002. "Handbook of Game Theory with Economic Applications," Handbook of Game Theory with Economic Applications, Elsevier, edition 1, volume 3, number 3.
    3. Peleg, Bezalel, 1992. "Axiomatizations of the core," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 13, pages 397-412, Elsevier.
    4. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
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    Cited by:

    1. Huang, Chen-Ying & Sjostrom, Tomas, 2006. "Implementation of the recursive core for partition function form games," Journal of Mathematical Economics, Elsevier, vol. 42(6), pages 771-793, September.

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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