Full farsighted rationality

Dominik Karos and Laura Robles

Games and Economic Behavior, 2021, vol. 130, issue C, 409-424

Abstract: An abstract game consists of a set of states, preferences over states, and an effectivity correspondence specifying what coalitions are allowed to replace one state by another one. Agents are called farsighted if, when deciding whether to support a coalition's move, they compare the status quo to the long term outcome following their deviation. Yet, this definition of farsightedness ignores a coalition's option to remain at the status quo allowing another coalition to move: agents are not fully farsighted. Therefore, we introduce extended expectation functions, which assign to each state a list of pairs consisting of a state and a coalition that is expected to move from the former to the latter. They endow agents with an expectation about what any deviation vis-a-vis maintaining the status quo entails. We impose three rationality axioms and provide a characterization of extended expectation functions that satisfy our axioms in terms of coalition behavior.

Keywords: Abstract games; Farsighted stability; Expectation functions; Coalition stable equilibrium (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:130:y:2021:i:c:p:409-424

DOI: 10.1016/j.geb.2021.09.004

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