Sequential decisions in allocation problems

In the context of cooperative TU-games, and given an order of players, we consider the problem of distributing the worth of the grand coalition as a sequential decision problem. In each step of the process, upper and lower bounds for the payoff of the players are required related to successive reduced games. Sequentially compatible payoffs are defined as those allocation vectors that meet these recursive bounds. The core of the game is reinterpreted as a set of sequentially compatible payoffs when the Davis-Maschler reduced game is considered (Th.1). Independently of the reduction, the core turns out to be the intersection of the family of the sets of sequentially compatible payoffs corresponding to the different possible orderings (Th.2), so it is in some sense order-independent. Finally, we analyze advantageous properties for the first player.core, reduced game, sequential allocation, tu-game

The Minimal Dominant Set is a Non-Empty Core-Extension

A set of outcomes for a TU-game in characteristic function form is dominant if it is, with respect to an outsider-independent dominance relation, accessible (or admissible) and closed. This outsider-independent dominance relation is restrictive in the sense that a deviating coalition cannot determine the payoffs of those coalitions that are not involved in the deviation. The minimal (for inclusion) dominant set is non-empty and for a game with a non-empty coalition structure core, the minimal dominant set returns this core.Core, Non-emptiness, Indirect dominance, Outsider-independence

The Nucleolus, the Kernel, and the Bargaining Set: An Update

One of David Schmeidler’s many important contributions in his distinguished career was the introduction of the nucleolus, one of the central single-valued solution concepts in cooperative game theory. This paper is an updated survey on the nucleolus and its two related supersolutions, i.e., the kernel and the bargaining set. As a first approach to these concepts, we refer the reader to the great survey by Maschler (1992); see also the relevant chapters in Peleg and Sudholter (2003). Building on the notes of four lectures on the nucleolus and the kernel delivered by one of the authors at the Hebrew University of Jerusalem in 1999, we have updated Maschler’s survey by adding more recent contributions to the literature. Following a similar structure, we have also added a new section that covers the bargaining set. The nucleolus has a number of desirable properties, including nonemptiness, uniqueness, core selection, and consistency. The first way to understand it is based on an egalitarian principle among coalitions. However, by going over the axioms that characterize it, what comes across as important is its connection with coalitional stability, as formalized in the notion of the core. Indeed, if one likes a single-valued version of core stability that always yields a prediction, one should consider the nucleolus as a recommendation. The kernel, which contains the nucleolus, is based on the idea of “bilateral equilibrium” for every pair of players. And the bargaining set, which contains the kernel, checks for the credibility of objections coming from coalitions. In this paper, section 2 presents preliminaries, section 3 is devoted to the nucleolus, section 4 to the kernel, and section 5 to the bargaining set.Iñarra acknowledges research support from the Spanish Government grant ECO2015-67519-P, and Shimomura from Grant-in-Aid for Scientific Research (A)18H03641 and (C)19K01558

Second-Price Proxy Auctions in Bidder-Seller Networks

We analyze a model of Internet auctions. Sellers each offer one item of a heterogeneous good to bidders who have unit-demand preferences. Items are sold in second-price proxy auctions. We derive a perfect Bayesian (epsilon-) equilibrium. Our experimental findings support the theoretical results. An analysis of sellers\u27 revenues in the Vickrey-auction reveals that they are non-monotonic in bids for substitutes valuations. We combine these results to investigate incomplete bidder-seller networks

A non-cooperative approach to the folk rule in minimum cost spanning tree problems

This paper deals with the problem of finding a way to distribute the cost of a minimum cost spanning tree problem between the players. A rule that assigns a payoff to each player provides this distribution. An optimistic point of view is considered to devise a cooperative game. Following this optimistic approach, a sequential game provides this construction to define the action sets of the players. The main result states the existence of a unique cost allocation in subgame perfect equilibria. This cost allocation matches the one suggested by the folk rule.The authors thank the support of the Spanish Ministry of Science, Innovation and Universities, the Spanish Ministry of Economy and Competitiveness, the Spanish Agency of Research, co-funded with FEDER funds, under the projects ECO2016-77200-P, ECO2017-82241-R, ECO2017-87245-R, PID2021-128228NB-I00, Consellería d’Innovación, Universitats, Ciencia i Societat Digital, Generalitat Valenciana [grant number AICO/2021/257], and Xunta de Galicia (ED431B 2019/34)

A three player network formation game

Efficiency and stability are the two most widely discussed issues in the networks literature. Desirable networks are such that they combine efficiency and stability. In Currarini and Morelli's (2000) non-cooperative game-theoretic model of sequential network formation, in which players propose links and demand payoffs, if the value of networks satisfy size monotonicity (i.e. the efficient networks connect all players in some way or another), then each and every equilibrium network is efficient. Our sequential game is not endogenous in terms of payoff division. The setting is such that players prefer being part of a two player network, although three player networks generate the greatest total value. However, we present our result that, the efficient complete graph is sustainable as a subgame perfect equilibrium as well as a trembling{hand perfect equilibrium. We further our analysis by examining various repeated game formulations that are most frequently used in the literature. We focus on "zero{memory" (Markov) strategies and show that our conclusion still holds under "zero{memory" (Markov) subgame perfection. Keywords: Network Formation, complete graph, efficiency, dynamic game, markov equilibrium