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The Subgame Perfect Core

Author

Listed:
  • Parkash Chander

    () (Jindal School of Government and Public Policy)

  • Myrna Wooders

    () (Vanderbilt University)

Abstract

We propose a cooperative solution concept for games in extensive form that incorporates both cooperation and subgame perfection. This new concept, which we label the subgame-perfect core, is a refinement of the core of an extensive game in the same sense as the set of subgame-perfect Nash equilibria is a refinement of the set of Nash equilibria. Moreover, each subgame perfect core payoff vector can be obtained as a subgame-perfect Nash equilibrium payoff vector of a modified extensive game. We establish several additional properties of the subgame-perfect core and demonstrate its applicability by studying three applications: the centipede game, the two-player infinite bargaining game of alternating offers, and a dynamic game of climate change. In addition, we motivate and introduce a concept of subgame-perfect strong Nash equilibrium of an extensive game and show that it is coalition proof.

Suggested Citation

  • Parkash Chander & Myrna Wooders, 2016. "The Subgame Perfect Core," Vanderbilt University Department of Economics Working Papers 16-00006, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:vuecon-sub-16-00009
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    References listed on IDEAS

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    More about this item

    Keywords

    Extensive game; subgame perfection; characteristic function game; core; centipede game; coalition-proof Nash equilibrium;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D0 - Microeconomics - - General

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