Discussion paper

DP14993 A Game-Theoretical Model of the Landscape Theory

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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Citation

Le Breton, M, A Shapoval and S Weber (eds) (2020), “DP14993 A Game-Theoretical Model of the Landscape Theory”, CEPR Press Discussion Paper No. 14993. https://cepr.org/publications/dp14993