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Implementing cooperative solution concepts: a generalized bidding approach

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  • Yuan Ju
  • David Wettstein

Abstract

This paper provides a framework for implementing and comparing several solution concepts for transferable utility cooperative games.We construct bidding mechanisms where players bid for the role of the proposer. The mechanisms differ in the power awarded to the proposer. The Shapley, consensus and equal surplus values are implemented in subgame perfect equilibrium outcomes as power shifts away from the proposer to the rest of the players. Moreover, an alternative informational structure where these solution concepts can be implemented without imposing any conditions of the transferable utility game is discussed as well.
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Suggested Citation

  • Yuan Ju & David Wettstein, 2009. "Implementing cooperative solution concepts: a generalized bidding approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 39(2), pages 307-330, May.
    • Handle: RePEc:spr:joecth:v:39:y:2009:i:2:p:307-330
    DOI: 10.1007/s00199-008-0335-y
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    More about this item

    Keywords

    Implementation; Bidding mechanism; Shapley value; Consensus value; Equal surplus value; C71; C72; D62;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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