Recontracting and stochastic stability in cooperative games

Jonathan Newton

Journal of Economic Theory, 2012, vol. 147, issue 1, 364-381

Abstract: An evolutionary style model of recontracting is given which guarantees convergence to core allocations of an underlying cooperative game. Unlike its predecessors in the evolution/learning literature, this is achieved without assumptions of convexity of the characteristic function or a reliance on random errors. The stochastic stability properties of the model are then examined and it is shown that stochastically stable states solve a simple and intuitive minimization problem which reduces to maximizing a Rawlsian SWF for a common class of utility functions. In contrast to previous analyses, the stochastically stable state is unique for a broad class of utility functions.

Keywords: Bargaining; Learning; Core; Convexity; Coalitions (search for similar items in EconPapers)
JEL-codes: C71 C72 C73 C78 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:1:p:364-381

DOI: 10.1016/j.jet.2011.11.007

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