Coalitions, leadership, and social norms: The power of suggestion in games (Q1187866)

This paper examines the set of outcomes sustainable by a leader with the power to make suggestions in games. By acting as focal points, these suggestions are important even if players can communicate and form coalitions. For finite horizon games, I show that sustainable outcomes are supported by ``scapegoat'' strategies, which hold a single player accountable for the actions of a group. For infinite horizon, two player repeated games, I show that by using an appropriate sequence of punishments and rewards, a leader can induce sufficiently patient players to play any feasible, individually rational outcome. Finally, leadership power is shown to increase of coalitions must consider the credibility of deviations in a manner similar to coalition of proof Nash equilibrium.