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Recontracting and stochastic stability in cooperative games

  • Newton, Jonathan

An evolutionary style model of recontracting is given which guarantees convergence to core allocations of an underlying cooperative game. Unlike its predecessors in the evolution/learning literature, this is achieved without assumptions of convexity of the characteristic function or a reliance on random errors. The stochastic stability properties of the model are then examined and it is shown that stochastically stable states solve a simple and intuitive minimization problem which reduces to maximizing a Rawlsian SWF for a common class of utility functions. In contrast to previous analyses, the stochastically stable state is unique for a broad class of utility functions.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 1 ()
Pages: 364-381

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:1:p:364-381
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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