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

Ana Paula MARTINS

Abstract


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.

Keywords. Two-person cooperative games, Cooperative games maximands, Opportunism, Pessimism.

JEL. C71, H56, D74, J51, J52, D39.

Keywords


Two-person cooperative games; Cooperative games maximands; Opportunism; Pessimism.

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References


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DOI: http://dx.doi.org/10.1453/ter.v8i4.2275

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