Strongly Subgame-Consistent Core in Stochastic Games

Abstract

This paper investigates stochastic games on finite tree graphs. A given n-player normal-form game is defined at each node of a tree. Transition to a next node of the tree is random and depends on the strategy profile realized in a current game. We construct a cooperative solution of the game by maximizing the total expected payoff of the players. The core is used as the solution concept of the cooperative game. We introduce the definition of a strongly subgame-consistent (strongly time-consistent) core. Finally, we suggest a method for designing a cooperative distribution procedure of an imputation from the core that guarantees its strong subgame consistency.