On Generalized Nash Rationalization of Collective Choice Functions

Abstract:

This paper analyzes collective outcomes in games from a revealed preference perspective. A collective choice function is rationalizable if there are such “rational” individual preferences, that the observed choices are the only equilibria. We consider a generalized concept of Nash equilibrium, which should be robust to deviation by not only individuals but some exogenously given coalitions as well. The paper provides sufficient conditions as well as necessary conditions for the collective choice function to be rationalizable given some notion of rationality. In addition, we show that the conditions coincide and become a criteria if we relax the definition of equilibrium to the standard definition of Nash.

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