Cooperative Stochastic Games with Mean-Variance Preferences

In stochastic games, the player’s payoff is a stochastic variable. In most papers, expected payoff is considered as a payoff, which means the risk neutrality of the players. However, there may exist risk-sensitive players who would take into account “risk” measuring their stochastic payoffs. In the paper, we propose a model of stochastic games with mean-variance payoff functions, which is the sum of expectation and standard deviation multiplied by a coefficient characterizing a player’s attention to risk. We construct a cooperative version of a stochastic game with mean-variance preferences by defining characteristic function using a maxmin approach. The imputation in a cooperative stochastic game with mean-variance preferences is supposed to be a random vector. We construct the core of a cooperative stochastic game with mean-variance preferences. The paper extends existing models of discrete-time stochastic games and approaches to find cooperative solutions in these games.

Non-Zero Sum Network Games with Pairwise Interactions

In the paper non-zero sum games on networks with pairwise interactions are investigated. The first stage is network formation stage, where players chose their preferable set of neighbours. In all following stages simultaneous non-zero sum game appears between connected players in network. As cooperative solutions the Shapley value and τ -value are considered. Due to a construction of characteristic function both formulas are simpli ed. It is proved, that the coeffcient λ in τ -value is independent from network form and number of players or neighbours and is equal to 1/2 . Also it is proved that in this type of games on complete network the Shapley value and τ -value are coincide.

An Entropy-Based Information Sharing Rule for Asymmetric Information Economies

The possibility to compare information partitions is investigated for economies with asymmetric information. First, we focus on two potentially suitable instruments, the Boylan distance and the entropy, and show that the former does not fit the purpose. Then, we use the entropy associated with the information partition of each trader to construct a partially endogenous rule which regulates the information sharing process among traders. Finally, we apply this rule to some examples and analyze its impact on two cooperative solutions: the core and the coalition structure value.

Internal Trade in Canada

This paper assesses the costs of internal trade barriers and proposes policies to improve internal trade. Estimates suggest that complete liberalization of internal trade in goods can increase GDP per capita by about 4 percent and reallocate employment towards provinces that experience large productivity gains from trade. The positive impact highlights the need for federal, provincial and territorial governments to work together to reduce internal trade barriers. There is significant scope to build on the new Canadian Free Trade Agreement to more explicitly identify key trade restrictions, resolve differences, and agree on cooperative solutions.

Theorizing Fiscal Policy Coordination

Fiscal policy coordination is marred by a classic collective action problem; it pays to be egoistical. Member states have an incentive to under- or over-stimulate their economies (what this chapter terms growth and stability free riding), despite a common interest in coordinated policies. Building on Mancur Olson’s premise on collective action failure, the chapter develops three research questions that guide the empirical investigation. These relate to the group latency of EU membership, the evidence for collective action, and finally the provision of incentives to keep free riding at bay. The theme running through this chapter is that the interdependence of EU economies requires cooperative solutions to common problems.

World Economic Outlook 2019

For many global industries path to success is fraught with uncertainty. Customers increasingly seek better efficiency, innovative technologies and digitization. Against protectionist trends, finding cooperative solutions that promote goods and services trade remains essential to preserve global growth. Possible obstacles include rising trade conflicts, geopolitical tensions and increasing political uncertainty. The rate of growth seems to have peaked in some economies, and economic development has become less synchronized.