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Farsighted Stable Sets

Author

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  • Francesco Ciardiello
  • Andrea Di Liddo

Abstract

A coalition is usually called stable if nobody has an immediate incentive to leave or to enter the coalition since he does not improve his payoff. This myopic behaviour does not consider further deviations which can take place after the first move. Chwe (1994) incorporated the idea of a farsighted behaviour in his definition of large consistent set (LCS). In some respects, we propose a different idea of dominance relation based on indirect dominance and on a different concept of belief on moving coalitions' behavior. A notion of stability for a coalitional game is introduced by taking into account the different degree of risk/safety of any player participating in a move. Some results about uncovered sets, internal stability are investigated. By exploiting our dominance and stability concepts, the prisoner's dilemma in coalitional form and its Nash equilibrium are studied. Some examples illustrating the differences between the largest consistent set, our stable set and stable set due to von Neumann and Morgenstern (1947) are presented.

Suggested Citation

  • Francesco Ciardiello & Andrea Di Liddo, 2009. "Farsighted Stable Sets," Quaderni DSEMS 03-2009, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
    • Handle: RePEc:ufg:qdsems:03-2009
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    File URL: http://www.economia.unifg.it/sites/sd01/files/allegatiparagrafo/29-11-2016/q032009.pdf
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    Cited by:

    1. Giovanni Villani & Marta Biancardi, 2019. "An Evolutionary Game Approach in International Environmental Agreements with R&D Investments," Computational Economics, Springer;Society for Computational Economics, vol. 54(3), pages 1027-1042, October.
    2. Marta Biancardi & Giovanni Villani, 2011. "Largest Consistent Set in International Environmental Agreements," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 407-423, October.
    3. Giovanni Villani & Marta Biancardi, 2011. "Largest Consistent Set in International Environmental Agreements," Quaderni DSEMS 04-2011, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.

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