We consider a multilateral Nash demand game where short-sighted players come to the bargaining table with requests for both coalition partners and the potentially generated resource. We prove that group learning leads with probability one to complete cooperation and a strictly self-enforcing allocation (i.e., in the interior of the core). Highlighting group dynamics, we demonstrate that behaviors which appear destructive can themselves lead to beneficial and strictly self-enforcing cooperation.
I use the theories of duality and optimal branchings to find a necessary and sufficient characterization of stochastically stable limit sets (SSLS) that helps improve the radius — modified coradius test of Ellison (2000). The improved shortcut I offer may permit the identification of SSLS when Ellison’s radius — modified coradius test fails to identify any, or may be able to pinpoint the true SSLS in cases where Ellison’s test identifies only a superset. I also demonstrate precisely why the radius — modified coradius test is not universally applicable and illuminate the connection between the modified coradius and the Lagrange multipliers of the optimal branching problem.
We provide theoretical foundations for several common (nested) representations of intrinsic linear habit formation. Our axiomatization introduces an intertemporal theory of weaning a decision-maker from her habits using the device of compensation. We clarify differences across specifications of the model, provide measures of habit-forming tendencies, and suggest methods for axiomatizing time-nonseparable preferences.