A Demand Adjustment Process

William Zame, Michael Maschler and Elaine Bennett
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Michael Maschler: Department of Mathematics, Hebrew University of Jerusalem, Israel
Elaine Bennett: Department of Economics, Virginia Polytechnic & State University, USA

International Journal of Game Theory, 1998, vol. 26, issue 4, 423-438

Abstract: The aspiration approach to cooperative games, which has been studied by a number of authors, including Cross, Turbay, Albers, Selten and Bennett, presumes that players in a game bargain over their reservation prices, or aspirations. A number of aspiration-based solution concepts have been put forth, and aspiration solutions have been connected to non-cooperative bargaining models. Missing in this approach has been theory of how aspirations themselves arise. The present paper is an attempt to fill this gap. It describes a very general demand adjustment process, using the framework of set-valued dynamical systems developed by Maschler and Peleg. This demand adjustment process always converges; sufficient conditions are given in order that it converge to an aspiration, and that it converge in a finite number of steps.

Date: 1998-05-19
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Working Paper: A Demand Adjustment Process (1994)
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