The strategy of conflict and cooperation

TY - UNPB

T1 - The strategy of conflict and cooperation

AU - Ismail, Mehmet S.

PY - 2018/8/21

Y1 - 2018/8/21

N2 - This paper introduces a unified framework called cooperative extensive form games, which (i) generalizes standard non-cooperative extensive form games, and (ii) allows for more complex coalition formation dynamics than previous concepts like coalition-proof Nash equilibrium. Central to this framework is a novel solution concept called cooperative equilibrium system (CES). CES differs from Nash equilibrium in two important respects. First, a CES is immune to both unilateral and multilateral "credible" deviations. Second, unlike Nash equilibrium, whose stability relies on the assumption that the strategies of non-deviating players are held fixed, CES allows for the possibility that players may regroup and adjust their strategies in response to a deviation. The main result establishes that every cooperative extensive form game, possibly with imperfect information, possesses a CES. For games with perfect information, the proof is constructive. This framework is broadly applicable in contexts such as oligopolistic markets and dynamic political bargaining.

AB - This paper introduces a unified framework called cooperative extensive form games, which (i) generalizes standard non-cooperative extensive form games, and (ii) allows for more complex coalition formation dynamics than previous concepts like coalition-proof Nash equilibrium. Central to this framework is a novel solution concept called cooperative equilibrium system (CES). CES differs from Nash equilibrium in two important respects. First, a CES is immune to both unilateral and multilateral "credible" deviations. Second, unlike Nash equilibrium, whose stability relies on the assumption that the strategies of non-deviating players are held fixed, CES allows for the possibility that players may regroup and adjust their strategies in response to a deviation. The main result establishes that every cooperative extensive form game, possibly with imperfect information, possesses a CES. For games with perfect information, the proof is constructive. This framework is broadly applicable in contexts such as oligopolistic markets and dynamic political bargaining.

KW - Conflict

KW - Cooperation

KW - Backward induction

KW - non-cooperative games

M3 - Working paper

BT - The strategy of conflict and cooperation

ER -