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Farsighted Stability with Heterogeneous Expectations

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  • Francis Bloch
  • Anne van den Nouweland

Abstract

This paper analyzes farsighted stable sets when agents have heterogeneous expectations over the dominance paths. We consider expectation functions satisfying two properties of path-persistence and consistency. We show that farsighted stable sets with heterogeneous expectations always exist and that any singleton farsighted stable set with common expectations is a farsighted stable set with heterogeneous expectations. We characterize singleton farsighted stable sets with heterogeneous expectations in one-to-one matching models and voting models, and show that the relaxation of the hypothesis of common expectations greatly expands the set of states that can be supported as singleton farsighted stable sets.

Suggested Citation

  • Francis Bloch & Anne van den Nouweland, 2017. "Farsighted Stability with Heterogeneous Expectations," ETA: Economic Theory and Applications 259479, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemth:259479
    DOI: 10.22004/ag.econ.259479
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    Cited by:

    1. Bloch, Francis & van den Nouweland, Anne, 2021. "Myopic and farsighted stable sets in 2-player strategic-form games," Games and Economic Behavior, Elsevier, vol. 130(C), pages 663-683.
    2. Herings, Jean-Jacques & Khan, Abhimanyu, 2022. "Network Stability under Limited Foresight," Other publications TiSEM 03f2ece9-902b-4dba-a16e-0, Tilburg University, School of Economics and Management.
    3. Herings, P. Jean-Jacques & Mauleon, Ana & Vannetelbosch, Vincent, 2020. "Matching with myopic and farsighted players," Journal of Economic Theory, Elsevier, vol. 190(C).
    4. Herings, P. Jean-Jacques & Mauleon, Ana & Vannetelbosch, Vincent, 2021. "Social Rationalizability with Mediation," LIDAM Discussion Papers CORE 2021017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Kimya, Mert, 2020. "Equilibrium coalitional behavior," Theoretical Economics, Econometric Society, vol. 15(2), May.
    6. Mariya Teteryatnikova, 2021. "Cautious farsighted stability in network formation games with streams of payoffs," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(4), pages 829-865, December.
    7. Kimya, Mert, 2020. "Farsighted Objections and Maximality in One-to-one Matching Problems," Working Papers 2020-14, University of Sydney, School of Economics.
    8. Dutta, Bhaskar & Vartiainen, Hannu, 2020. "Coalition formation and history dependence," Theoretical Economics, Econometric Society, vol. 15(1), January.
    9. Korpela, Ville & Lombardi, Michele & Vartiainen, Hannu, 2019. "Implementation with foresighted agents," MPRA Paper 102496, University Library of Munich, Germany.
    10. Kimya, Mert, 2020. "Farsighted Objections and Maximality in One-to-one Matching Problems," Working Papers 202014, University of Sydney, School of Economics, revised Jul 2021.
    11. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald, 2021. "Farsighted manipulation and exploitation in networks," Journal of Economic Theory, Elsevier, vol. 196(C).
    12. Kimya, Mert, 2021. "Coalition Formation Under Dominance Invariance," Working Papers 202106, University of Sydney, School of Economics.
    13. Kimya, Mert, 2022. "Farsighted objections and maximality in one-to-one matching problems," Journal of Economic Theory, Elsevier, vol. 204(C).
    14. Korpela, Ville & Lombardi, Michele & Vartiainen, Hannu, 2021. "Implementation in largest consistent set via rights structures," Games and Economic Behavior, Elsevier, vol. 128(C), pages 202-212.
    15. Hirai, Toshiyuki & Watanabe, Naoki & Muto, Shigeo, 2019. "Farsighted stability in patent licensing: An abstract game approach," Games and Economic Behavior, Elsevier, vol. 118(C), pages 141-160.
    16. Demeze-Jouatsa, Ghislain-Herman & Karos, Dominik, 2021. "Farsighted Rationality in Hedonic Games," Center for Mathematical Economics Working Papers 654, Center for Mathematical Economics, Bielefeld University.
    17. de Callatay, Pierre & Mauleon, Ana & Vannetelbosch, Vincent, 2021. "Minimally Farsighted Unstable Networks," LIDAM Discussion Papers CORE 2021012, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Korpela, Ville & Lombardi, Michele, 2019. "Mechanism design with farsighted agents," MPRA Paper 94436, University Library of Munich, Germany.
    19. Karos, Dominik & Kasper, Laura, 2018. "Farsighted Rationality," Research Memorandum 011, Maastricht University, Graduate School of Business and Economics (GSBE).
    20. Kimya, Mert, 2021. "Coalition Formation Under Dominance Invariance," Working Papers 2021-06, University of Sydney, School of Economics.
    21. Karos, Dominik & Robles, Laura, 2021. "Full farsighted rationality," Games and Economic Behavior, Elsevier, vol. 130(C), pages 409-424.

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    12. Mariya Teteryatnikova, 2021. "Cautious farsighted stability in network formation games with streams of payoffs," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(4), pages 829-865, December.
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    Keywords

    Research Methods/ Statistical Methods;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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