A solution concept forn-person noncooperative games

The paper describes a solution concept forn-person noncooperative games, developed jointly by the author and Reinhard Selten. Its purpose is to select one specific perfect equilibrium points=s (G) as the solution of any given noncooperative gameG. The solution is constructed by an inductive procedure. In defining the solutions (G) of gameG, we use the solutionss (G ^*) of the component gamesG ^* (if any) ofG; and in defining the solutions (G^*) of any such component gameG ^*, we use the solutionss (G ^**) of its own component gamesG ^** (if any), etc. This inductive procedure is well-defined because it always comes to an end after a finite number of steps. At each level, the solution of a game (or of a component game) is defined in two steps. First, aprior subjectiveprobability distribution p _i is assigned to the pure strategies of each playeri, meant to represent the other players' initial expectations about playeri's likely strategy choice. Then, a mathematical procedure, called thetracing procedure, is used to define the solution on the basis of these prior probability distributionsp _i . The tracing procedure is meant to provide a mathematical representation for thesolution process by which rational players manage to coordinate their strategy plans and their expectations, and make them converge to one specific equilibrium point as solution for the game     

A new value for games without transferable utilities

We define axiomatically a unique concept of value for games without transferable utilities, which is a generalization ofNash's bargaining model. Unlike other concepts, it does not coincide with theShapley value in the case of transferable utilities.     

Absorbing set forn-person games

This study tries to modify von Neumann and Morgenstern (vN-M) solution. As with John Harsanyi in 1974, vN-M solution is viewed in a dynamic sense. The final outcome of a game not only depends on the ability of players and standards of behavior of the particular society but also upon which imputation is proposed first. An absorbing property is obtained as a result of modifying the bargaining process of Harsanyi. This modified solution concept maintains the internal stability condition of vN-M solution, and replaces their external stability condition by this absorbing property.

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Zusammenfassung Diese Arbeit zielt auf eine Modifizierung des Begriffs der von Neumann-Morgenstern (vN-M) Lösung. In Anlehnung an John Harsanyi (1974) werden vN-M-Lösungen dynamisch interpretiert. Das endgültige Ergebnis eines Spiels hängt nicht nur von der Fähigkeit der Spieler und den Verhaltensstandards einer bestimmten Gesellschaft ab, sondern auch davon, welche Imputation zunächst vorgeschlagen wird. Durch eine entsprechende Modifizierung des von Harsanyi vorgeschlagenen Verhandlungsprozesses erhält man eine Absorbtionseigenschaft. Das demgemäß modifizierte Lösungskonzept erhält die interne Stabilitätsbedingung der vN-M-Lösung und ersetzt die externe Stabilitätsbedingung durch die Absorbtionseigenschaft.

     

The nucleolus and kernel of veto-rich transferable utility games

The process of computing the nucleolus of arbitrary transferable utility games is notoriously hard. A number of papers have appeared in which the nucleolus is computed by an algorithm in which either one or a huge number of huge linear programs have to be solved. We show that on the class of veto-rich games, the nucleolus is the unique kernel element. Veto-rich games are games in which one of the players is needed by coalitions in order to obtain a non-zero payoff. We then provide a fast algorithm which does not use linear programming techniques to compute the nucleolus of these games. Furthermore, we provide a few examples of economic situations which belong to the class of veto-rich games and which are treated in the literature.     

Polytopes of special classes of the balanced transferable utility games

Under study are the polytopes of (0, 1)-normalized convex and 1-convex (dual simplex) n-person TU-games and monotonic big boss games.We solve the characterization problems of the extreme points of the polytopes of 1-convex games, symmetric convex games, and big boss games symmetric with respect to the coalition of powerless agents. For the remaining polytopes, some subsets of extreme points are described.     

On extensions of the core and the anticore of transferable utility games

We consider several related set extensions of the core and the anticore of games with transferable utility. An efficient allocation is undominated if it cannot be improved, in a specific way, by sidepayments changing the allocation or the game. The set of all such allocations is called the undominated set, and we show that it consists of finitely many polytopes with a core-like structure. One of these polytopes is the $L_1$ -center, consisting of all efficient allocations that minimize the sum of the absolute values of the excesses. The excess Pareto optimal set contains the allocations that are Pareto optimal in the set obtained by ordering the sums of the absolute values of the excesses of coalitions and the absolute values of the excesses of their complements. The $L_1$ -center is contained in the excess Pareto optimal set, which in turn is contained in the undominated set. For three-person games all these sets coincide. These three sets also coincide with the core for balanced games and with the anticore for antibalanced games. We study properties of these sets and provide characterizations in terms of balanced collections of coalitions. We also propose a single-valued selection from the excess Pareto optimal set, the min-prenucleolus, which is defined as the prenucleolus of the minimum of a game and its dual.     

Note on transferable utility

We provide a condition for an individual preference ordering to be represented by a function measured in terms of a commodity, i.e., for the commodity to be transferable utility. We also consider the relationships between conditions of the preference ordering and the utility function.     

The tracing procedure: A Bayesian approach to defining a solution forn-person noncooperative games

The paper proposes a Bayesian approach to selecting a particular equilibrium points ^* of any given finiten-person noncooperative game Γ as solution for Γ. It is assumed that each playeri starts his analysis of the game situation by assigning a subjective prior probability distributionp _j to the set of all pure strategies available to each other playerj. (The prior distributionsp _j used by all other playersi in assessing the likely strategy choice of any given playerj will be identical, because all these playersi will compute this prior distributionp _j from the basic parameters of game Γ in the same way.) Then, the players are assumed to modify their subjective probability distributionsp _j over each other's pure strategies systematically in a continuous manner until all of these probability distributions will converge, in an appropriate sense, to a specific equilibrium points ^* of Γ, which, then, will be accepted as solution. A mathematical procedure, to be called thetracing procedure, is proposed to provide a mathematical representation for this intellectual process of convergent expectations. Two variants of this procedure are described. One, to be called thelinear tracing procedure, is shown to define a unique solution in “almost all” cases but not quite in all cases. The other variant, to be called thelogarithmic tracing procedure, always defines a unique solution in all possible cases. Moreover, in all cases where the linear procedure yields a unique solution at all, both procedures always yield the same solution. For any given game Γ, the solution obtained in this way heavily depends on the prior probability distributionsp ₁,...,p _n used as a starting point for the tracing procedure. In the last section, the results of the tracing procedure are given for a simple class of two-person variable-sum games, in numerical detail.     

The Harsanyi value for nontransferable utility games with restricted cooperation

A nontransferable utility (NTU) game assigns a set of feasible pay-off vectors to each coalition. In this article, we study NTU games in situations in which there are restrictions on coalition formation. These restrictions will be modelled through interior structures, which extend some of the structures considered in the literature on transferable utility games for modelling restricted cooperation, such as permission structures or antimatroids. The Harsanyi value for NTU games is extended to the set of NTU games with interior structure.     

A value for multichoice games

A multichoice game is a generalization of a cooperative TU game in which each player has several activity levels. We study the solution for these games proposed by Van Den Nouweland et al. (1995) [Van Den Nouweland, A., Potters, J., Tijs, S., Zarzuelo, J.M., 1995. Cores and related solution concepts for multi-choice games. ZOR-Mathematical Methods of Operations Research 41, 289–311]. We show that this solution applied to the discrete cost sharing model coincides with the Aumann-Shapley method proposed by Moulin (1995) [Moulin, H., 1995. On additive methods to share joint costs. The Japanese Economic Review 46, 303–332]. Also, we show that the Aumann-Shapley value for continuum games can be obtained as the limit of multichoice values for admissible convergence sequences of multichoice games. Finally, we characterize this solution by using the axioms of balanced contributions and efficiency.     

Properties of solutions of cooperative games with transferable utilities

We understand a solution of a cooperative TU-game as the α-prenucleoli set, α ∈ R, which is a generalization of the notion of the [0, 1]-prenucleolus. We show that the set of all α-nucleoli takes into account the constructive power with the weight α and the blocking power with the weight (1 ? α) for all possible values of the parameter α. The further generalization of the solution by introducing two independent parameters makes no sense. We prove that the set of all α-prenucleoli satisfies properties of duality and independence with respect to the excess arrangement. For the considered solution we extend the covariance propertywith respect to strategically equivalent transformations.     

A note on aspirations in non-transferable utility games

For an important class of non-transferable utility games it is shown by short proofs that the set of aspirations is not empty, and that aspirations are closely related to coalitionally rational payoff distributions.     

A value for bi-cooperative games

Bi-cooperative games were introduced by Bilbao et al. as a generalization of TU cooperative games, in which each player can participate positively, negatively, or not at all. In this paper, we propose a definition of a share of the worth obtained by some players after they decided on their participation in the game. It turns out that the cost allocation rule does not look for a given player to her contribution at the opposite participation option to the one she chooses. The relevance of the value is discussed on several examples.     

Stable outcomes of the roommate game with transferable utility

We consider the TU version of Gale and Shapley's roommate game. We find several results that are analogous to known results for the NTU game, such as a characterization of stable outcomes by forbidden minors, a characterization of the extreme points of the core, and a median property of stable outcomes. The TU roommate game is a special case of the TU partitioning game of Kaneko and Wooders. Bondareva and Shapley's balancedness condition for the core of such games is the starting point for our forbidden minors approach. Received: April 1999/Revised version: November 2000     

A value for continuously-many-choice cooperative games

We extend a multi-choice cooperative game to a continuously-many-choice cooperative game. The set of all continuously-many-choice cooperative games is isomorphic to the set of all cooperative fuzzy games. A continuously-many-choice cooperative game and a cooperative fuzzy game have different physical interpretations. We define a value for the continuously-many-choice cooperative game and show that the value for the continuously-many-choice cooperative game has most properties as the traditional Shapley value does. Also, we give a probabilistic interpretation for the value. The probabilistic interpretation reveals some interesting properties of the value. Finally, we discuss the uniqueness of the value.     

A value for mixed action-set games

We extend the Aumann-Shapley value to mixed action-set games, i.e., multilevel TU games where there are simultaneously two types of players: discrete players that possess a finite number of activity levels in which they can join a coalition, and continuous players that possess a continuum of levels. Received February 1999/Final version October 2000     

Axioms for expected utility inn-person games

International Journal of Game Theory - The von Neumann and Morgenstern utility axioms apply to an individual's preferences on a set of probability distributions that is closed under convex...     

A value for partially defined cooperative games

The Shapley value provides a method, which satisfies certain desirable axioms, of allocating benefits to the players of a cooperative game. When there aren players andn is large, the Shapley value requires a large amount of accounting because the number of coalitions grows exponentially withn. This paper proposes a modified value that shares some of the axiomatic properties of the Shapley value yet allows the consideration of games that are defined only for certain coalitions. Two different axiom systems are shown to determine the same modified value uniquely.     

A marginalistic value for monotonic set games

In this paper we characterize a value, called a marginalistic value, for monotonic set games, which can be considered to be the analog of the Shapley value for TU-games. For this characterization we use a modification of the strong monotonicity axiom of Young, but the proof is rather different from his.