Scandinavian Working Papers in Economics
Discussion Papers on Economics,
University of Southern Denmark, Department of Economics
No 5/2018: A Generalization of the Harsanyi NTU Value to Games with Incomplete Information
Andrés Salamanca ()
Additional contact information
Andrés Salamanca: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Abstract: In this paper, we introduce a solution concept generalizing the Harsanyi non-transferable utility (NTU) value to cooperative games with incomplete information. The so-defined S-solution is characterized by virtual utility scales that extend the Harsanyi-Shapley fictitious weighted utility transfer procedure. We construct a three-player cooperative game in which Myerson’s [Cooperative games with incomplete information. Int. J. Game Theory, 13, 1984, pp. 69-96] generalization of the Shapley NTU value does not capture some “negative” externality generated by the adverse selection. However, when we explicitly compute the S-solution in this game, it turns out that it prescribes a more intuitive outcome which takes into account the above mentioned informational externality.
Keywords: Cooperative games; incomplete information; virtual utility
29 pages, November 25, 2018
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