Reconciling the Nash and Kalai-Smorodinsky cooperative solutions: generalized maximands of CES form

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Abstract

This paper suggests variations to the baseline Nash cooperative solution that take into account the Kalai-Smorodinsky critique. One the one hand, a CES form of the maximand is proven to accommodate both the generalized two-person Nash and the Kalai-Smorodinsky - as other proportional - solutions as special cases. As an alternative, a Stone-Geary formulation is forwarded, weighing both the distances to the threat and to the ideal point, along with the corresponding CES generalization. Interpretations of the implied equilibrium solutions – generalizable to n-person cooperative games – are provided, arising as equations balancing geometric averages of measures of attitude towards (large) risk(s) of the players.
Original languageEnglish
Pages (from-to)103-134
Number of pages32
JournalTurkish Economic Review
Volume8
Issue number4
DOIs
Publication statusPublished - 2021

Keywords

  • Two-person cooperative games
  • Cooperative games maximands
  • Opportunism
  • Pessimism

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