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A Demand Adjustment Process

Author

Listed:
  • William R. Zame

    (Department of Economics, University of California, 405 Hilgard Avenue, Los Angeles, CA 90024, USA)

  • Michael Maschler

    (Department of Mathematics, Hebrew University of Jerusalem, Israel)

  • Elaine Bennett

    (Department of Economics, Virginia Polytechnic & State University, USA)

Abstract

The aspiration approach to cooperative games, which has been studied by a number of authors, including Cross, Turbay, Albers, Selten and Bennett, presumes that players in a game bargain over their reservation prices, or aspirations. A number of aspiration-based solution concepts have been put forth, and aspiration solutions have been connected to non-cooperative bargaining models. Missing in this approach has been theory of how aspirations themselves arise. The present paper is an attempt to fill this gap. It describes a very general demand adjustment process, using the framework of set-valued dynamical systems developed by Maschler and Peleg. This demand adjustment process always converges; sufficient conditions are given in order that it converge to an aspiration, and that it converge in a finite number of steps.

Suggested Citation

  • William R. Zame & Michael Maschler & Elaine Bennett, 1998. "A Demand Adjustment Process," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(4), pages 423-438.
    • Handle: RePEc:spr:jogath:v:26:y:1998:i:4:p:423-438
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    References listed on IDEAS

    as
    1. Engl, Greg & Scotchmer, Suzanne, 1996. "The core and the hedonic core: Equivalence and comparative statics," Journal of Mathematical Economics, Elsevier, vol. 26(2), pages 209-248.
    2. Moldovanu, Benny & Winter, Eyal, 1994. "Core implementation and increasing returns to scale for cooperation," Journal of Mathematical Economics, Elsevier, vol. 23(6), pages 533-548, November.
    3. Bennett, Elaine & Zame, William R, 1988. "Bargaining in Cooperative Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 17(4), pages 279-300.
    4. Moulin, H, 1990. "Cores and Large Cores When Population Varies," International Journal of Game Theory, Springer;Game Theory Society, vol. 19(2), pages 219-232.
    5. Bennett, Elaine & Wooders, Myrna, 1979. "Income distribution and firm formation," Journal of Comparative Economics, Elsevier, vol. 3(3), pages 304-317, September.
    6. Elaine Bennett, 1986. "Multilateral Bargaining Problems," UCLA Economics Working Papers 594, UCLA Department of Economics.
    7. Sharkey, W.W., 1993. "A Characterization of Some Aspiration Solutions with an Application to Spatial Games," Papers 95, Bell Communications - Economic Research Group.
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