The Subgame Perfect Core

Parkash Chander and Myrna Wooders

No 16-00006, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: We propose a cooperative solution concept for games in extensive form that incorporates both cooperation and subgame perfection. This new concept, which we label the subgame-perfect core, is a refinement of the core of an extensive game in the same sense as the set of subgame-perfect Nash equilibria is a refinement of the set of Nash equilibria. Moreover, each subgame perfect core payoff vector can be obtained as a subgame-perfect Nash equilibrium payoff vector of a modified extensive game. We establish several additional properties of the subgame-perfect core and demonstrate its applicability by studying three applications: the centipede game, the two-player infinite bargaining game of alternating offers, and a dynamic game of climate change. In addition, we motivate and introduce a concept of subgame-perfect strong Nash equilibrium of an extensive game and show that it is coalition proof.

Keywords: Extensive game; subgame perfection; characteristic function game; core; centipede game; coalition-proof Nash equilibrium (search for similar items in EconPapers)
JEL-codes: C7 D0 (search for similar items in EconPapers)
Date: 2016-03-13
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:vuecon-sub-16-00009

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