Farsighted stability in average return games (Q1867843): Difference between revisions

che author considers a production economy with a commonly owned production process. In an average return game for such an economy, each agent chooses his input contribution and the total output is distributed proportional to the individual input contributions. He examines two notions of stability on strategy profiles in an average return game: A farsighted stable set and the largest consistent set. It is shown that every farsighted stable set is essentially a singleton and it is contained in the set of Pareto efficient strategy profiles. By contrast the largest consistent set is so large as to contain also Pareto inefficient strategy profiles, i.e., it is equal to the set of individually rational strategy profiles.