Equilibrium with Internal Transfers
Nash equilibrium (NE) arises from selfish utility maximization, yet its social welfare can be arbitrarily far from optimal. Moreover, computing an NE is intractable in general. We study augmented game models in which players use budget-balanced internal transfers to improve incentives before play. We first introduce \emph{Self-Enforcing Transfer Equilibrium} (SETE), where players commit to nonnegative peer-to-peer transfers that are paid only if the recipient does not deviate from a prescribed strategy. For polymatrix games, we show that every stationary point of the social welfare function, in particular any socially optimal strategy profile, can be sustained as a SETE. This induces a Na...
| Authors | Mingyang Liu, Gabriele Farina, Asuman Ozdaglar |
|---|---|
| Primary category | cs.GT |
| Published | 18 June 2026 |
| Last updated at source | 18 June 2026 |
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