Establishing the Selten Perfect Equilibrium

Working Papers on the Profitable Economics No. 338

7 Pages Posted: 26 Dec 2009

See all articles by Hak Choi

Hak Choi

Chienkuo Technology University - Department of International Business; Chung-Hua Institution for Economic Research

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

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

Hak Choi (Contact Author)

Chienkuo Technology University - Department of International Business ( email )

No.1, Chiehsou N. Road
Changhua City, 500
Taiwan
+886 91 901-4618 (Phone)

HOME PAGE: http://euntold.wordpress.com

Chung-Hua Institution for Economic Research ( email )

75, Changhsin St.
Taipei
Taiwan

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