Adaptive Play in Multiplayer Bargaining Situations

Abstract

We study the dual issues of allocation and coalition formation in a model of social learning. For a class of economies which can be expressed in terms of a real valued characteristic function, we first show that all self-perpetuating allocations realized from a simple bargaining game must be core allocations although players make simultaneous demands for surplus and only on their own behalf. Following this, we provide a sufficient condition under which the society eventually learns to divide the surplus according to some core allocation, regardless of the initial history.