Template-Type: ReDIF-Paper 1.0

Author-Name: Matt Van Essen
Author-Name-Last: Van Essen
Author-Name-First: Matt
Author-Workplace-Name: Department of Economics, University of Tennessee
Author-Email: mvanesse@utk.edu
Author-Homepage: https://www.mattvanessen.com/

Abstract: We introduce a unifying stability concept to cooperative game theory–the equity equilibrium. A central authority selects an outcome of the game to enforce and evaluates its stability using a collection of functions called a “complaint system.”These complaints are used to identify the grievances against and the concessions to each player. Equity equilibrium occurs when an individually rational payo¤ con…guration balances the grievances and concessions of each player. We establish the existence of equity equilibrium for any valid complaint system and under any coalition structure. Next, we show that equity equilibrium under speci…c complaint systems characterizes the kernel, the Shapley value, and the generalized Nash bargaining solution of a cooperative game. We show how simplicial algorithms can be employed for computing any type of equity equilibrium. This approach is illustrated with an example from the Tennessee Valley Authority. 
Title: Equity Equilibrium for Cooperative Games
Length:  47 pages
Creation-Date:  2024-11
Revision-Date: 
File-URL: http://web.utk.edu/~jhollad3/RePEc/2024-04.pdf
File-Format: Application/pdf
File-Function: First version, 2024
File-Format: Application/pdf
File-Function: 
Number: 2024-04
Classification-JEL: C92, D82, D9, H41, Q51
Keywords: Cooperative Games, Equity Equilibrium, Kernel, Shapley Value, Computation of Cooperative Solutions
Handle: RePEc:ten:wpaper:2024-04_1