Paper #1094

Title:

Cooperative games in strategic form

Authors:

Sergiu Hart and Andreu Mas-Colell

Date:

May 2008

Abstract:

In this paper we view bargaining and cooperation as an interaction superimposed on a strategic form game. A multistage bargaining procedure for N players, the “proposer commitment” procedure, is presented. It is inspired by Nash’s two-player variable-threat model; a key feature is the commitment to “threats.” We establish links to classical cooperative game theory solutions, such as the Shapley value in the transferable utility case. However, we show that even in standard pure exchange economies the traditional coalitional function may not be adequate when utilities are not transferable.

Keywords:

Bargaining, Commitment, Nash variable threat

JEL codes:

C7, D5, D7

Area of Research:

Microeconomics

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