Alpha- and beta-characteristic functions in cooperative non-sidepayment games: An experimental test

This article investigates theories of payoff allocation in cooperative non-sidepayment games, that is, games where players can form coalitions and coordinate strategies but cannot redistribute payoffs via sidepayments. A labotatory experiment was conducted with 4-person, 3-strategy non-sidepayment games. The goal of this experiment was to ascertain which characteristic function, V_α(S) or V_β(S), provides the more accurate basis for payoff predictions from solution concepts. Predictions from each of three solution concepts (core, stable set, imputation set) were computed on the basis of both V_α(S) and V_β(S), making a total of six theories under test. The results showed two basic findings. First, for each of the three solutions, the prediction computed on the basis of V_α(S) was more accurate than the prediction computed from V_α(S). Second, the β-core was the most accurate of the six theories tested. Overall, these results support the view that V_β(S) is superior to V_α(S) as a basis for payoff predictions in cooperative non-sidepayment games.