OPTIMISTIC STABILITY IN GAMES OF PERFECT INFORMATION

I apply the 'Theory of Social Situations' (Greenberg, 1990) to a speci al class of extensive form games of perfect information and without ch ance moves. I prove the existence of an 'Optimistic Stable Standard of Behavior' (OSSB) which is associated with such games. This class incl udes all n-person discounted sequential bargaining games where a finit e set of strictly positive offers can be made at each stage. The deriv ed OSSB yields an appealing selection from among the subgame perfect p aths. As is always the case, OSSB is strongly related to the von Neuma nn and Morgenstern abstract stable sets.