Economics Graduate Program - Master Degree

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Coalitional Deviation Proof Equilibrium In Nonatomic Games

(Institute of Social Sciences, 2019) Ahmadov, Kamil ; Ertemel, Sinan ; 601970 ; Economics ; Ekonomi

Nonatomic games are a useful way to model games with a large number players, which allows us to deal with a situation where each has a small influence on the outcomes by approximating a finite number of players by a continuum. However, in some instances, the results are problematic because there are implausible equilibria due to the strategic insignificance of the atomless players. Despite sometimes giving unrealistic results, nonatomic games are valuable because they may allow other parts of the game to use continuums. Therefore, it is important to develop an equilibrium concept for nonatomic games that gives players a small strategic influence on the outcome. This study provides an equilibrium refinement for nonatomic games, that allows nonatomic players to have a small, but positive, impact on the outcome. Particularly, we develop an equilibrium concept where nonatomic players can deviate from the pure strategy Nash Equilibrium in arbitrarily small groups. We introduce the coalitional deviation proof equilibrium, an equilibrium that is robust to arbitrarily small deviations.