Social Rationalizability with Mediation

Abstract

We propose a solution concept for social environments called social rationalizability with mediation that identifies the consequences of common knowledge of rationality and farsightedness. In a social environment several coalitions may and could be willing to move at the same time. Individuals not only hold conjectures about the behaviors of other individuals but also about how a mediator is going to solve conflicts of interest. The set of socially rationalizable outcomes with mediation is shown to be non-empty for all social environments, and it can be computed by an iterative reduction procedure. We show that social rationalizability with mediation does not necessarily satisfy coalitional rationality when the number of coalition members is greater than two.

Local farsightedness in network formation

“…12 Other approaches to farsightedness can be found in Xue (1998), Herings et al (2004Herings et al ( , 2019Herings et al ( , 2023, Mauleon and Vannetelbosch (2004) ∅ for k 2 ≥ . There is a unique farsighted outgoing improving path from g 4 to g 5 consisting of the sequence g g g ( , , ) 4 1 5 .…”

Preface to the Special issue on “Group Formation and Farsightedness”

“…In "Social Rationalizability with Mediation," Herings, Mauleon and Vannetelbosch [8] propose a new solution concept for social environments called social rationalizability with mediation that identifies the consequences of common knowledge of rationality and farsightedness. In a social environment several coalitions may and could be willing to move at the same time.…”