Stability and Cooperative Solution in Stochastic Games

Alessandro Tampieri and Elena Parilina ()

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: Cooperative game theory is effective in explaining many economic interactions, such as risk-sharing agreements or the enforcing role of social norms. In a stochastic environ- ment, the analysis of these issues is generalised by taking into account the presence of shocks. The paper finds the conditions of dynamic stability for cooperative stochastic games. Principles of dynamic stability include three conditions: subgame consistency, strategic stability and irrational-behaviour-proof of the cooperative agreement.

Keywords: Cooperative Stochastic Game; stationary strategies; time consistency; subgame consistency; strategic stability; irrational-behaviour-proof (search for similar items in EconPapers)
JEL-codes: C71 C73 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-ore
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Citations: View citations in EconPapers (4)

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https://hdl.handle.net/10993/18930 (application/pdf)

Related works:
Journal Article: Stability and cooperative solution in stochastic games (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:14-26

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