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Cooperation by Asymmetric Agents in a Joint Project
Author(s) -
BRÂNZEI R.,
IÑARRA E.,
TIJS S.,
ZARZUELO J. M.
Publication year - 2005
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2005.00237.x
Subject(s) - sophistication , core (optical fiber) , stochastic game , context (archaeology) , microeconomics , mathematical economics , economics , repeated game , nash equilibrium , set (abstract data type) , distribution (mathematics) , screening game , computer science , game theory , mathematics , telecommunications , social science , paleontology , mathematical analysis , sociology , programming language , biology
The object of study is cooperation in joint projects where agents may have different desired sophistication levels for the project and where some of the agents may have low budgets. In this context, questions concerning the optimal realizable sophistication level and the distribution of the related costs among the participants are tackled. A related cooperative game, the enterprise game, and a non‐cooperative game, the contribution game, are both helpful. It turns out that there is an interesting relation between the core of the convex enterprise game and the set of strong Nash equilibria of the contribution game. Special attention is paid to a new rule inspired by the Baker–Thompson rule in the airport landing fee literature. For this rule, the project is split up in a sequence of subprojects where the involved participants pay amounts which are, roughly speaking, equal, but not more than their budgets allow. The resulting payoff distribution turns out to be a core element of the related enterprise game.