On Potential Maximization as a Refinement of Nash Equilibrium
Working paper
Economics Bulletin
Issue number:
No. 12
Series:
Vol. 3
Year:
2003
Journal pages:
1−11
We specify an adjustment process that converges to the set of potential−maximizing strategy profiles for 3−player cooperation−formation games or n−player cooperation−formation games based on a superadditive characteristic function. Our analysis provides a justification for potential maximization as a refinement of Nash equilibrium in these settings.