Subgame Perfect Cooperation in an Extensive Game

Parkash Chander and Myrna Wooders

No 1008, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: This paper brings together two of the most important solution concepts of game theory �subgame-perfect Nash equilibrium of a non-cooperative game and the core of a cooperativegame. Our approach rests on two fundamental ideas: (1) Given an extensive game, the formationof a coalition leads to a new game where all the members of the coalition become one player. (2)At the origin of any subgame, the only possible coalitions consist of players who have decision nodes in the subgame. We introduce a concept of subgame perfect cooperative equilibrium, which we label the gamma-core of an extensive game. We provide a necessary and sufficient condition for the existence of the gamma-core of an extensive game of perfect information. As a motivating example, we formulate the problem of global warming as a dynamic game with simultaneous moves and show that if the payoff functions are quadratic, then the gamma-core of the game is nonempty.

Keywords: subgame perfect cooperation; extensive form game; subgame perfection; gamma-core (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.accessecon.com/pubs/VUECON/vu10-w08.pdf First version, April 2010 (application/pdf)

Related works:
Journal Article: Subgame-perfect cooperation in an extensive game (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:1008

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