Establishing the Selten Perfect Equilibrium
Working Papers on the Profitable Economics No. 338
7 Pages Posted: 26 Dec 2009
Date Written: December 20, 2009
Abstract
Previous bargaining theories confirm that all efforts to stabilize the unstable Pareto optimal solution of cooperation are self-defeating. Instead of issuing threat, this paper shows the carrots. We do not give the players carrots, but we just show them that if they cooperate they can make the pie bigger. Then, the Selten perfect equilibrium can be achieved without information leakage. A duopoly model is applied to prove the possibility.
Keywords: Bargaining, Cooperative Game, Duopoly Competition
JEL Classification: C78, D51, F11
Suggested Citation: Suggested Citation
Choi, Hak, Establishing the Selten Perfect Equilibrium (December 20, 2009). Working Papers on the Profitable Economics No. 338, Available at SSRN: https://ssrn.com/abstract=1526402 or http://dx.doi.org/10.2139/ssrn.1526402
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