Abstract

Does rational bargaining yield a social contract that is efficient and so inclusive? A core allocation, that is, an allocation that gives each coalition at least as much as it can get on its own, is efficient. However, some coalitional games lack a core allocation, so rationality does not require one in those games. Does rationality therefore permit exclusion from the social contract? I replace realization of a core allocation with another type of equilibrium achievable in every coalitional game. Fully rational agents coordinate the pursuit of incentives so that equilibria of this type are efficient. They adopt a social contract that is efficient and inclusive