Template-type: ReDif-Paper 1.0 Author-Name: Herings, P. Jean-Jacques Author-workplace-name: RS: GSBE Theme Data-Driven Decision-Making, RS: GSBE Theme Conflict & Cooperation, Microeconomics & Public Economics Author-Name: Mauleon, Ana Author-Name: Vannetelbosch, Vincent Title: Social rationalizability with mediation Abstract: We propose a solution concept for social environments called social
rationalizability with mediation that identifies the consequences of common knowledge of rationality and farsightedness. In a social environment several coalitions may and could be willing to move at the same time. Individuals not only hold conjectures about the behaviors of other individuals but also about how a mediator is going to solve conflicts of interest. The set of socially rationalizable outcomes with mediation is shown to be non-empty for all social environments and it can be computed by an iterative reduction procedure. We show that social rationalizability with mediation does not necessarily satisfy coalitional rationality when the number of coalition members is greater than two. Classification-JEL: c70,c72,c78 Series: GSBE Research Memoranda Creation-Date: 20211202 Number: 019 File-URL: https://cris.maastrichtuniversity.nl/ws/files/75666086/RM21019.pdf File-Format: application/pdf File-Size: 555023 Handle: Repec:unm:umagsb:2021019 DOI: 10.26481/umagsb.2021019