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Farsighted Coalitional Stability

  • Michael Suk-Young Chwe

    (University of Chicago, Department of Economic)

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    I define the largest consistent set, a solution concept which applies to situations in which coalitions freely form but cannot make binding contracts, act publicly, and are fully ``farsighted'' in that a coalition considers the possibility that once it acts, another coalition might react, a third coalition might in turn react, and so on, without limit. I establish weak nonemptiness conditions and apply it to strategic and coalitional form games and majority rule voting. I argue that it improves on the von Neumann- Morgenstern stable set as it is usually defined but is consistent with a generalization of the stable set as in the theory of social situations.

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    Paper provided by University of Chicago, Department of Economics in its series Working Papers with number _001.

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    Date of creation: May 1993
    Date of revision:
    Handle: RePEc:wop:chicec:_001
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    2. Dutta, Bhaskar & Ray, Debraj & Sengupta, Kunal & Vohra, Rajiv, 1989. "A consistent bargaining set," Journal of Economic Theory, Elsevier, vol. 49(1), pages 93-112, October.
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    5. Le Breton, M & Salles, M, 1990. "The Stability Set of Voting Games: Classification and Genericity Results," International Journal of Game Theory, Springer, vol. 19(2), pages 111-27.
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    7. Kahn, Charles M. & Mookherjee, Dilip, 1992. "The good, the bad, and the ugly: Coalition proof equilibrium in infinite games," Games and Economic Behavior, Elsevier, vol. 4(1), pages 101-121, January.
    8. Sen, Amartya K, 1977. "Social Choice Theory: A Re-examination," Econometrica, Econometric Society, vol. 45(1), pages 53-89, January.
    9. E. Kalai & D. Schmeidler, 1975. "An Admissible Set Occurring in Various Bargaining Situations," Discussion Papers 191, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Kalai, Ehud & Pazner, Elisha A & Schmeidler, David, 1976. "Collective Choice Correspondences as Admissible Outcomes of Social Bargaining Processes," Econometrica, Econometric Society, vol. 44(2), pages 233-40, March.
    11. D. B. Bernheim, 2010. "Rationalizable Strategic Behavior," Levine's Working Paper Archive 514, David K. Levine.
    12. Perry, Motty & Reny, Philip J, 1994. "A Noncooperative View of Coalition Formation and the Core," Econometrica, Econometric Society, vol. 62(4), pages 795-817, July.
    13. Wilson, Robert, 1971. "Stable coalition proposals in majority-rule voting," Journal of Economic Theory, Elsevier, vol. 3(3), pages 254-271, September.
    14. Thomson, A., 1989. "The Consistency Principle," RCER Working Papers 192, University of Rochester - Center for Economic Research (RCER).
    15. Greenberg, Joseph, 1989. "Deriving strong and coalition-proof nash equilibria from an abstract system," Journal of Economic Theory, Elsevier, vol. 49(1), pages 195-202, October.
    16. Rubinstein, Ariel, 1980. "Stability of decision systems under majority rule," Journal of Economic Theory, Elsevier, vol. 23(2), pages 150-159, October.
    17. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    18. John C. Harsanyi, 1974. "An Equilibrium-Point Interpretation of Stable Sets and a Proposed Alternative Definition," Management Science, INFORMS, vol. 20(11), pages 1472-1495, July.
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