A Demand Adjustment Process
International Journal of Game Theory, Vol. 26, No. 4 (1997)
Posted: 2 Apr 1998
The aspiration approach to cooperative games, which has been studied by a number of authors, including Cross, Turbay, Albers, Selten and Bennett, presumes that players in a game bargain over their reservation prices, or aspirations. A number of aspiration-based solution concepts have been put forth, and aspiration solutions have been connected to non-cooperative bargaining models. Missing in this approach has been theory of how aspirations themselves arise. The present paper is an attempt to fill this gap. It describes a very general demand adjustment process, using the framework of set-valued dynamical systems developed by Maschler and Peleg. This demand adjustment process always converges; sufficient conditions are given in order that it converge to an aspiration, and that it converge in a finite number of steps.
Note: Elaine Bennett, deceased, was affiliated with Virginia Polytechnic Institite & State University at the time this abstract was written.
JEL Classification: C70
Suggested Citation: Suggested Citation