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Parkash Chander and Myrna Wooders
''The Subgame Perfect Core''
We propose a cooperative solution concept for games in extensive form that incorporates both cooperation and subgame perfection. This new concept, which we label the subgame-perfect core, is a refinement of the core of an extensive game in the same sense as the set of subgame-perfect Nash equilibria is a refinement of the set of Nash equilibria. Moreover, each subgame perfect core payoff vector can be obtained as a subgame-perfect Nash equilibrium payoff vector of a modified extensive game. We establish several additional properties of the subgame-perfect core and demonstrate its applicability by studying three applications: the centipede game, the two-player infinite bargaining game of alternating offers, and a dynamic game of climate change. In addition, we motivate and introduce a concept of subgame-perfect strong Nash equilibrium of an extensive game and show that it is coalition proof.
Keywords: Extensive game, subgame perfection, characteristic function game, core, centipede game, coalition-proof Nash equilibrium
JEL: C7 - Game Theory and Bargaining Theory: General
D0 - Microeconomics: General
Manuscript Received : Mar 12 2016 Manuscript Accepted : Mar 13 2016

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