People interested in the research are advised to contact the author for the final version of the publication, or visit the DOI to the publisher's website. • The final author version and the galley proof are versions of the publication after peer review. • The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal.

In this paper we study cooperative games with limited cooperation possibilities, represented by an undirected cycle-free communication graph. Players in the game can cooperate if and only if they are connected in the graph. We introduce a new single-valued solution concept, the average tree solution. Our solution is characterized by component efficiency and component fairness. The interpretation of component fairness is that deleting a link between two players yields for both resulting components the same average change in payoff, where the average is taken over the players in the component. The average tree solution is always in the core of the restricted game and can be easily computed as the average of n specific marginal vectors, where n is the number of players. We also show that the average tree solution can be generated by a specific distribution of the Harsanyi dividends.

People interested in the research are advised to contact the author for the final version of the publication, or visit the DOI to the publisher's website. • The final author version and the galley proof are versions of the publication after peer review. • The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal. If the publication is distributed under the terms of Article 25fa of the Dutch Copyright Act, indicated by the "Taverne" license above, please follow below link for the End User Agreement:

Social environments constitute a framework in which it is possible to study how groups of agents interact in a society. The framework is general enough to analyze both non-cooperative and cooperative games. In order to remedy the shortcomings of existing solution concepts and to identify the consequences of common knowledge of rationality and farsightedness, we propose to apply extensive-form rationalizability to the framework of social environments. For us, the social environment is a primitive. On this social environment is defined a multistage game. An outcome of the social environment is socially rationalizable if and only if it is rationalizable in the multistage game. The set of socially rationalizable outcomes is shown to be non-empty for all social environments and it can be computed by an iterative reduction procedure. We introduce a definition of coalitional rationality for social environments and show that it is satisfied by social rationalizability.  2004 Elsevier Inc. All rights reserved. JEL classification: C72; C78

A set of networks G is pairwise farsightedly stable (i) if all possible farsighted pairwise deviations from any network g ∈ G to a network outside G are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsighted improving path from any network outside the set leading to some network in the set, and (iii) if there is no proper subset of G satisfying conditions (i) and (ii). A non-empty pairwise farsightedly stable set always exists. We provide a full characterization of unique pairwise farsightedly stable sets of networks. Contrary to other pairwise concepts, pairwise farsighted stability yields a Pareto dominant network, if it exists, as the unique outcome. Finally, we study the relationship between pairwise farsighted stability and other concepts such as the largest pairwise consistent set and the von Neumann-Morgenstern pairwise farsightedly stable set.