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Coalitional Bargaining with Consistent Counterfactuals

Author

Listed:
  • Roberto Burguet
  • Ramon Caminal
Abstract
We propose a new solution concept for TU cooperative games in characteristic function form, the SCOOP, that builds on the symmetric Nash Bargaining Solution (NBS), adding to it a consistency requirement for negotiations inside every coalition. The SCOOP specifies the probability of success and the payoffs to each coalition. Players share the surplus of a coalition according to the NBS, with disagreement payoffs that are computed as the expectation of payoffs in other coalitions, using some common probability distribution, which in turn is derived from the prior distribution. The predicted outcome can be probabilistic or deterministic, but only an efficient coalition can succeed with probability one. We discuss necessary and sufficient conditions for an efficient solution. In either case, the SCOOP always exists, is generically unique for superadditive games, and easy to compute. Moreover, in the spirit of the Nash program, we propose a reasonable non-cooperative protocol whose stationary equilibrium identifies the SCOOP as the limit equilibrium outcome.

Suggested Citation

  • Roberto Burguet & Ramon Caminal, 2016. "Coalitional Bargaining with Consistent Counterfactuals," Working Papers 923, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:923
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    References listed on IDEAS

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    Cited by:

    1. Roberto Serrano, 2021. "Sixty-seven years of the Nash program: time for retirement?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(1), pages 35-48, March.
    2. Voß, Achim & Schopf, Mark, 2016. "Special Interest Politicsː Contribution Schedules versus Nash Bargaining," WiSo-HH Working Paper Series 30, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.
    3. Achim Voss & Mark Schopf, 2018. "Special interest politics: Contribution schedules vs. Nash bargaining," Economics and Politics, Wiley Blackwell, vol. 30(2), pages 256-273, July.

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    More about this item

    Keywords

    cooperative games; coalitional bargaining; endogenous disagreement payoffs; consistent beliefs;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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