The average tree solution for multi-choice forest games

In this article we study cooperative multi-choice games with limited cooperation possibilities, represented by an undirected forest on the player set. Players in the game can cooperate if they are connected in the forest. We introduce a new (single-valued) solution concept which is a generalization of the average tree solution defined and characterized by Herings et al. (Games Econ. Behav. 62:77–92, 2008) for TU-games played on a forest. Our solution is characterized by component efficiency, component fairness and independence on the greatest activity level. It belongs to the precore of a restricted multi-choice game whenever the underlying multi-choice game is superadditive and isotone. We also link our solution with the hierarchical outcomes (Demange in J. Polit. Econ. 112:754–778, 2004) of some particular TU-games played on trees. Finally, we propose two possible economic applications of our average tree solution.