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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.

Suggested Citation

  • Effrosyni Diamantoudi, "undated". "Equilibrium Binding Agreements under Diverse Bahavioral Assumptions," Economics Working Papers 2001-2, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2001-2
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    References listed on IDEAS

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    1. Moulin, Herve, 1994. "Social choice," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 31, pages 1091-1125 Elsevier.
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    Citations

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    Cited by:

    1. Albert Banal-Estañol & Ines Macho-Stadler & Jo Seldeslachts, 2003. "Mergers, Investment Decisions and Internal Organisation," CESifo Working Paper Series 944, CESifo Group Munich.
    2. Sheng-Chieh Huang & Xiao Luo, 2008. "Stability, sequential rationality, and subgame consistency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 34(2), pages 309-329, February.
    3. Effrosyni Diamantoudi, 2003. "Equilibrium binding agreements under diverse behavioral assumptions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 431-446, September.
    4. repec:smu:ecowpa:1403 is not listed on IDEAS
    5. Roland Pongou & Lawrence Diffo Lambo & Bertrand Tchantcho, 2008. "Cooperation, stability and social welfare under majority rule," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 35(3), pages 555-574, June.
    6. Haeringer, Guillaume, 2004. "Equilibrium binding agreements: a comment," Journal of Economic Theory, Elsevier, vol. 117(1), pages 140-143, July.

    More about this item

    Keywords

    Coalition structure; binding agreement; stability;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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