Template-type: ReDif-Paper 1.0
Author-Name: Karos, Dominik
Author-workplace-name: RS: GSBE ETBC, Microeconomics & Public Economics, RS: GSBE Theme Conflict & Cooperation
Author-Name: Kasper, Laura
Title: Farsighted Rationality
Abstract: Farsighted deviations are based on agents' abilities to compare the outcome of a farsighted deviation to the status quo. However, agents do not account for deviations by others in case they do not change the status quo; so, they are not fully farsighted. We use extended expectation functions to capture a coalition's belief about subsequent moves of other coalitions in both cases. We provide three stability and optimality axioms on coalition behavior and show that an expectation function satisfies these axioms if and only if it corresponds to an equilibrium of the abstract game that is stable with respect to coalitional deviations. We provide applications of our solution for games in characteristic function form and matching problems.
Classification-JEL: c71,c72
Series: GSBE Research Memoranda
Creation-Date: 20180426
Number: 011
File-URL: https://cris.maastrichtuniversity.nl/ws/files/25765130/RM18011.pdf
File-Format: application/pdf
File-Size: 591331
Handle: Repec:unm:umagsb:2018011
DOI: 10.26481/umagsb.2018011