Reconciling the Nash and Kalai-Smorodinsky Cooperative Solutions: Generalized Maximands of CES Form

Ana Paula Martins

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: This note suggests variations to the baseline Nash cooperative solution that take into account the Kalai-Smorodinsky critique. One the one hand, a CES form of the maximand is proven to accommodate both the generalized two-person Nash and the Kalai-Smorodinsky - as other proportional - solutions as special cases. As an alternative, a Stone-Geary formulation is forwarded, weighing both the distances to the threat and to the ideal point, along with the corresponding CES generalization. Interpretations of the implied equilibrium solutions – generalizable to n-person cooperative games – are provided, arising as equations balancing geometric averages of measures of attitude towards (large) risk(s) of the players.

Keywords: Two-Person Cooperative Games; Cooperative Games Maximands; Opportunism; Pessimism. (search for similar items in EconPapers)
JEL-codes: C71 D39 D74 H56 J51 J52 (search for similar items in EconPapers)
Date: 2002-11-05
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Citations: View citations in EconPapers (5)

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