Econometrica: Sep, 2019, Volume 87, Issue 5

Maximality in the Farsighted Stable Set

https://doi.org/10.3982/ECTA16047
p. 1763-1779

Debraj Ray, Rajiv Vohra

Harsanyi (1974) and Ray and Vohra (2015) extended the stable set of von Neumann and Morgenstern to impose farsighted credibility on coalitional deviations. But the resulting farsighted stable set suffers from a conceptual drawback: while coalitional moves improve on existing outcomes, coalitions might do even better by moving elsewhere. Or other coalitions might intervene to impose their favored moves. We show that every farsighted stable set satisfying some reasonable and easily verifiable properties is unaffected by the imposition of these stringent maximality constraints. The properties we describe are satisfied by many, but not all, farsighted stable sets.

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