Cooperative games with imcomplete information

Abstract

A bargaining solution concept which generalizes the Nash bargaining solution and the Shapley NTU value is defined for cooperative games with incomplete information. These bargaining solutions are efficient and equitable when interpersonal comparisons are made in terms of certainvirtual utility scales. A player's virtual utility differs from his real utility by exaggerating the difference from the preferences of false types that jeopardize his true type. In any incentive-efficient mechanism, the players always maximize their total virtual utility ex post. Conditionally-transferable virtual utility is the strongest possible transferability assumption for games with incomplete information.