A DEMAND ADJUSTMENT PROCESS

The aspiration approach to cooperative games, which has been studied b y a number of authors, including Cross, Turbay, Albers, Selten and Ben nett, presumes that players in a game bargain over their reservation p rices, or aspirations. A number of aspiration-based solution concepts have been put forth, and aspiration solutions have been connected to n on-cooperative bargaining models. Missing in this approach has been th eory of how aspirations themselves arise. The present paper is an atte mpt to fill this gap. It describes a very general demand adjustment pr ocess, using the framework of set-valued dynamical systems developed b y Maschler and Peleg. This demand adjustment process always converges; sufficient conditions are given in order that ii converge to an aspir ation, and that it converge in a finite number of steps.