We wish to thank K. Chatterjee, B. Moldovanu, A. Okada, D. Ray, M. Satterthwaite, E. Winter, and A. Wolinsky for helpful discussions. We also thank a co-editor and three anonymous referees for helpful comments. Part of this research was done while Olivier Compte was visiting Northwestern University.
The Coalitional Nash Bargaining Solution
Article first published online: 12 OCT 2010
© 2010 The Econometric Society
Volume 78, Issue 5, pages 1593–1623, September 2010
How to Cite
Compte, O. and Jehiel, P. (2010), The Coalitional Nash Bargaining Solution. Econometrica, 78: 1593–1623. doi: 10.3982/ECTA7883
- Issue published online: 12 OCT 2010
- Article first published online: 12 OCT 2010
- Manuscript received April, 2008; final revision received February, 2010.
- credible coalitions;
The coalitional Nash bargaining solution is defined to be the core allocation for which the product of players' payoffs is maximal. We consider a non-cooperative model with discounting in which one team may form and every player is randomly selected to make a proposal in every period. The grand team, consisting of all players, generates the largest surplus. But a smaller team may form. We show that as players get more patient if an efficient and stationary equilibrium exists, it must deliver payoffs that correspond to the coalitional Nash bargaining solution. We also characterize when an efficient and stationary equilibrium exists, which requires conditions that go beyond the nonemptiness of the core.