Radzvilas, Mantas (2016): Hypothetical Bargaining and the Equilibrium Selection Problem in NonCooperative Games.

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Abstract
Orthodox game theory is often criticized for its inability to single out intuitively compelling Nash equilibria in noncooperative games. The theory of virtual bargaining, developed by Misyak and Chater (2014) suggests that players resolve noncooperative games by making their strategy choices on the basis of what they would agree to play if they could openly bargain. The proposed formal model of bargaining, however, has limited applicability in noncooperative games due to its reliance on the existence of a unique nonagreement point – a condition that is not satisfied by games with multiple Nash equilibria. In this paper, I propose a model of ordinal hypothetical bargaining, called the BenefitEquilibration Reasoning, which does not rely on the existence of a unique reference point, and offers a solution to the equilibrium selection problem in a broad class of noncooperative games. I provide a formal characterization of the solution, and discuss the theoretical predictions of the suggested model in several experimentally relevant games.
Item Type:  MPRA Paper 

Original Title:  Hypothetical Bargaining and the Equilibrium Selection Problem in NonCooperative Games 
English Title:  Hypothetical Bargaining and the Equilibrium Selection Problem in NonCooperative Games 
Language:  English 
Keywords:  Nash equilibrium, bargaining, equilibrium selection problem, Nash bargaining solution, correlated equilibrium, virtual bargaining, bestresponse reasoning 
Subjects:  C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C70  General C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C71  Cooperative Games C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C72  Noncooperative Games C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C78  Bargaining Theory ; Matching Theory 
Item ID:  70248 
Depositing User:  Mr Mantas Radzvilas 
Date Deposited:  24 Mar 2016 13:32 
Last Modified:  01 Oct 2019 20:52 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/70248 