Payment schemes for sustaining cooperation in dynamic games played over event trees

Elena M. Parilina and Georges Zaccour

European Journal of Operational Research, 2024, vol. 313, issue 3, 1200-1216

Abstract: We propose two payment schemes to sustain cooperation in the class of dynamic games played over event trees, where the transition between nodes is determined by Nature. The planning horizon is given and finite, but the game can terminate at any intermediate stage. The two payment schemes share some desirable properties, e.g., dynamic individual rationality, stability against deviation along the cooperative state trajectory, and efficiency, but differ in some other features. We illustrate the construction of two payment schemes with an example in environmental economics.

Keywords: Game theory; Dynamic games played over event trees; Sustainability of cooperation; Payment schemes; Individual rationality (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:313:y:2024:i:3:p:1200-1216

DOI: 10.1016/j.ejor.2023.10.016

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