Summary
A bargaining solution concept which generalizes the Nash bargaining solution and the Shapley NTU value is defined for cooperative games with incomplete information. These bargaining solutions are efficient and equitable when interpersonal comparisons are made in terms of certain virtual utility scales. A player’s virtual utility differs from his real utility by exaggerating the difference from the preferences of false types that jeopardize his true type. In any incentive-efficient mechanism, the players always maximize their total virtual utility ex post. Conditionally transferable virtual utility is the strongest possible transferability assumption for games with incomplete information.
Research for this paper was supported by the Kellogg Center for Advanced Study in Managerial Economics and Decision Sciences, and by a research fellowship from I.B.M.
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Myerson, R. (2005). Cooperative games with incomplete information. In: Glycopantis, D., Yannelis, N.C. (eds) Differential Information Economies. Studies in Economic Theory, vol 19. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-26979-7_25
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DOI: https://doi.org/10.1007/3-540-26979-7_25
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