The Core of a Normal Form Game

László Kóczy ()

Game Theory and Information from University Library of Munich, Germany

Abstract: Due to the externalities, in normal form games a deviation changes the payoff of all players inducing a retaliation by the remaining or residual players. The stability of an outcome depends on the expectations potential deviators have about this reaction, but so far no satisfactory theory has been provided. The present paper continues the work of Chander and Tulkens (1997) where deviators consider residual equilibria, but we allow coalitions to form, moreover introduce consistency between the residual solution and the solution of the original game. Optimistic and pessimistic considerations produce a pair of cores. These cores are compared to some existing cooperative concepts such as the gamma- and r-cores and the equilibrium binding agreements. In our final section we discuss the predominance of the grand coalition and suggest a generalisation of the normal form where such a precedence can be removed.

Keywords: externalities; residual game; cohesiveness; partition function (search for similar items in EconPapers)
JEL-codes: C70 C71 C72 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2003-02-17
New Economics Papers: this item is included in nep-gth and nep-ind
Note: Type of Document - LaTeX; prepared on MikTeX-WinEdt on PC; to print on PostScript; pages: 22 ; figures: none. Comments welcome!
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Citations: View citations in EconPapers (2)

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Journal Article: The Core in a Normal Form Game (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpga:0302002

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