Rational bargaining in games with coalitional externalities

Peter Borm, Yuan Ju and David Wettstein ()

Journal of Economic Theory, 2015, vol. 157, issue C, 236-254

Abstract: This paper provides a flexible strategic framework to analyze bargaining and values in environments with coalitional externalities. Within this framework we propose a new value that extends the Shapley value to partition function form games, the so-called Rational Belief Shapley (RBS) value. We investigate the strategic foundation of the RBS value by constructing an implementation mechanism. This mechanism extends existing models of multilateral bargaining by allowing players a higher degree of freedom to form coalitions. The same framework of bidding and renegotiation allows for natural variations of the RBS-mechanism. In this way, alternative “Shapley-like” values are obtained, and a unified platform to analyze and compare these solutions is provided.

Keywords: Externalities; Bargaining; Partition function form game; Rational belief Shapley value; Implementation; Bidding mechanism (search for similar items in EconPapers)
JEL-codes: C71 C72 D62 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:157:y:2015:i:c:p:236-254

DOI: 10.1016/j.jet.2015.01.011

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