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Title: A Game-Theoretical Model of the Landscape Theory

Author(s): Michel Le Breton, Alexander Shapoval and Shlomo Weber

Publication Date: July 2020

Keyword(s): blocs, gradual deviation, hedonic games, landscape equilibrium, Landscape theory and potential functions

Programme Area(s): Public Economics

Abstract: In this paper we examine a game-theoretical generalization of the landscape theory introduced by Axelrod and Bennett (1993). In their two-bloc setting each player ranks the blocs on the basis of the sum of her individual evaluations of members of the group. We extend the Axelrod-Bennett setting by allowing an arbitrary number of blocs and expanding the set of possible deviations to include multi-country gradual deviations. We show that a Pareto optimal landscape equilibrium which is immune to profitable gradual deviations always exists. We also indicate that while a landscape equilibrium is a stronger concept than Nash equilibrium in pure strategies, it is weaker than strong Nash equilibrium.

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Bibliographic Reference

Le Breton, M, Shapoval, A and Weber, S. 2020. 'A Game-Theoretical Model of the Landscape Theory'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14993