Posted Online July 17, 2006.
Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Coalitional Rationalizability
*Attila Ambrus11Princeton University and Harvard University.
* I thank Dilip Abreu for support and extremely valuable comments at all stages of writing this paper. I would also like to thank Eddie Dekel, Drew Fudenberg, Faruk Gul, Wolfgang Pesendorfer, Ariel Rubinstein, and Marciano Siniscalchi for useful comments and discussions. Finally, I would like to thank Jeffrey Ely, Haluk Ergin, Erica Field, Jozsef Molnar, Wojciech Olszewski, Hugo Sonnenschein, Andrea Wilson, and seminar participants at various universities for useful comments.
Abstract
This paper investigates how groups or coalitions of players can act in their collective interest in noncooperative normal form games even if equilibrium play is not assumed. The main idea is that each member of a coalition will confine play to a subset of their strategies if it is in their mutual interest to do so. An iterative procedure of restrictions is used to define a noncooperative solution concept, the set of coalitionally rationalizable strategies. The procedure is analogous to iterative deletion of never best response strategies, but operates on implicit agreements by different coalitions. The solution set is a nonempty subset of the rationalizable strategies.
RSS (TOC Alert)
PDF