On the sensitivity of von Neumann and Morgenstern abstract stable sets: The stable and the individual stable bargaining set (Q2367179): Difference between revisions

The paper studies some properties of the ``stable'' and ``individual stable'' bargaining sets (SBS and ISBS). These notions were first formulated within the monograph ``The theory of social situations. An alternative game-theoretic approach'' of the author (1990), which is a new and integrative approach to the study of formal models in the social and behavioral sciences. More specifically, the theory of social situations has two main ingredients. First, it offers a unified way to represent cooperative and noncooperative social environments --- by means of ``situations''. Second, it offers a unified criterion for the recommendations, namely, that the ``standard of behavior'' (for the given situation) be ``stable''. One of the stability concepts in this theory (the ``optimistic stable standard of behavior'') can formally be associated with a von Neumann and Morgenstern \((vN\& M)\) abstract stable set. We fully characterize both the SBS and the ISBS in 3-person games with transferable utilities, and we also show that in ordinally convex games these two sets coincide with the core. (As a by-product we thus derive a new proof that such games have a nonempty core.) In addition, our analysis points out an interesting sensitivity of the \(vN\& M\) abstract stable set to the dominance relation that is being employed: Insisting that each member of the coalition be made better off yields the SBS, while requiring that at least one member of the coalition is better off and all others are not worse off yields the ISBS. Rather surprisingly, the SBS and the ISBS may have an empty intersection, even in games with transferable utilities. The paper concludes with an open question.