Reduced games, consistency, and the core

Abstract

This paper establishes an axiomatization of the core by means of an internal consistency property with respect to a new reduced game introduced by Moulin (1985). Given a payoff vector chosen by a solution for some game, and given a subgroup of agents, we define thereduced game as that in which each coalition in the subgroup could attain payoffs to its members only if they are compatible with the initial payoffs toall the members outside of the subgroup. The solution isconsistent if it selects the same payoff distribution for the reduced game as initially. We show that consistency together with individual rationality characterizes the core of both transferable and non-transferable utility games.