Beschreibung:
We propose a new farsighted solution concept for abstract games, the Subgame Perfect Consistent Set (SPCS), based on consistency in the spirit of the von Neumann Morgenstern solution and on subgame perfect equilibrium. Rather than follow constructs such as indirect dominance, farsighted players according to the SPCS adopt best responses, and unlike expectations function based farsighted solution concepts, the SPCS incorporates explicitly inherent uncertainties in the abstract game model. We show the SPCS exists for any finite game. Surprisingly, the SPCS is shown to always lead to Pareto efficiency in farsighted normal form games. This result is demonstrated in various oligopolistic settings, and is shown to imply, for example, that players who follow the SPCS reasoning are always able to share the monopolistic profit in farsighted settings based on Bertrand and Cournot competition, and achieve coordination and Pareto efficiency in decentralized supply chain contracting, even when they cannot form coalitions