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Coalition Formation with Binding Agreements

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  • Kyle Hyndman
  • Debraj Ray

Abstract

We study coalition formation in “real time”, a situation in which coalition formation is intertwined with the ongoing receipt of pay-offs. Agreements are assumed to be permanently binding: They can only be altered with the full consent of existing signatories. For characteristic function games we prove that equilibrium processes—whether or not these are history dependent—must converge to efficient absorbing states. For three-player games with externalities each player has enough veto power that a general efficiency result can be established. However, there exist four-player games in which all Markov equilibria are inefficient from every initial condition, despite the ability to write permanently binding agreements. Copyright 2007, Wiley-Blackwell.

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File URL: http://hdl.handle.net/10.1111/j.1467-937X.2007.00450.x
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Bibliographic Info

Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 74 (2007)
Issue (Month): 4 ()
Pages: 1125-1147

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Handle: RePEc:oup:restud:v:74:y:2007:i:4:p:1125-1147

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Cited by:
  1. László Á. Kóczy, 2012. "Stationary consistent equilibrium coalition structures constitute the recursive core," Working Paper Series, Óbuda University, Keleti Faculty of Business and Management 1203, Óbuda University, Keleti Faculty of Business and Management.
  2. Roy Chowdhury, Prabal & Sengupta, Kunal, 2008. "Multi-person Bargaining With Complementarity: Is There Holdout?," MPRA Paper 11517, University Library of Munich, Germany.
  3. Britz, Volker & Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2010. "Non-cooperative support for the asymmetric Nash bargaining solution," Journal of Economic Theory, Elsevier, Elsevier, vol. 145(5), pages 1951-1967, September.
  4. Eguia, Jon X., 2011. "Voting blocs, party discipline and party formation," Games and Economic Behavior, Elsevier, Elsevier, vol. 73(1), pages 111-135, September.
  5. Seidmann, Daniel J., 2009. "Preferential trading arrangements as strategic positioning," Journal of International Economics, Elsevier, Elsevier, vol. 79(1), pages 143-159, September.
  6. Boncinelli, Leonardo & Pin, Paolo, 2014. "Efficiency and Stability in a Process of Teams Formation," MPRA Paper 56356, University Library of Munich, Germany.
  7. Debraj Ray & Rajiv Vohra, 2013. "Coalition Formation," Working Papers, Brown University, Department of Economics 2013-1, Brown University, Department of Economics.
  8. Vartiainen, Hannu, 2011. "Dynamic coalitional equilibrium," Journal of Economic Theory, Elsevier, Elsevier, vol. 146(2), pages 672-698, March.
  9. Roy Chowdhury, Prabal & Sengupta, Kunal, 2009. "Transparency, complementarity and holdout," MPRA Paper 17606, University Library of Munich, Germany.
  10. László Á. Kóczy & Péter Biró & Balázs Sziklai, 2012. "Fair apportionment of voting districts in Hungary?," Working Paper Series, Óbuda University, Keleti Faculty of Business and Management 1204, Óbuda University, Keleti Faculty of Business and Management.
  11. Maruta, Toshimasa & Okada, Akira, 2012. "Dynamic group formation in the repeated prisonerʼs dilemma," Games and Economic Behavior, Elsevier, Elsevier, vol. 74(1), pages 269-284.
  12. Ellingsen, Tore & Paltseva, Elena, 2012. "The private provision of excludable public goods: An inefficiency result," Journal of Public Economics, Elsevier, Elsevier, vol. 96(9-10), pages 658-669.
  13. Vincent Anesi & Daniel J Seidmann, 2012. "Bargaining in Standing Committees," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2012-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  14. Licun Xue & Lingling Zhang, 2012. "Bidding and sequential coalition formation with externalities," International Journal of Game Theory, Springer, Springer, vol. 41(1), pages 49-73, February.
  15. Joosung Lee, 2013. "Bargaining and Buyout," 2013 Papers, Job Market Papers ple701, Job Market Papers.

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