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Coalition Formation in Political Games

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  • Daron Acemoglu

    (MIT)

  • Georgy Egorov

    (Harvard)

  • Konstantin Sonin

    ()
    (CEFIR)

Abstract

We study the formation of a ruling coalition in political environments. Each individual is endowed with a level of political power. The ruling coalition consists of a subset of the individuals in the society and decides the distribution of resources. A ruling coalition needs to contain enough powerful members to win against any alternative coalition that may challenge it, and it needs to be self-enforcing, in the sense that none of its subcoalitions should be able to secede and become the new ruling coalition. We first present an axiomatic approach that captures these notions and determines a (generically) unique ruling coalition. We then construct a simple dynamic game that encompasses these ideas and prove that the sequentially weakly dominant equilibria (and the Markovian trembling hand perfect equilibria) of this game coincide with the set of ruling coalitions of the axiomatic approach. We also show the equivalence of these notions to the core of a related non-transferable utility cooperative game. In all cases, the nature of the ruling coalition is determined by the power constraint, which requires that the ruling coalition be powerful enough, and by the enforcement constraint, which imposes that no subcoalition of the ruling coalition that commands a majority is self-enforcing. The key insight that emerges from this characterization is that the coalition is made self-enforcing precisely by the failure of its winning subcoalitions to be self-enforcing. This is most simply illustrated by the following simple finding: with simple majority rule, while three-person (or larger) coalitions can be self-enforcing, two-person coalitions are generically not self-enforcing. Therefore, the reasoning in this paper suggests that three-person juntas or councils should be more common than two-person ones. In addition, we provide conditions under which the grand coalition will be the ruling coalition and conditions under which the most powerful individuals will not be included in the ruling coalition. We also use this framework to discuss endogenous party formation.

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Bibliographic Info

Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0090.

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Length: 58 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:cfr:cefirw:w0090

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Related research

Keywords: Coalition Formation; Collective Choice; Cooperative Game Theory; Political Economy; Self-Enforcing Coalitions; Stability;

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References

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  1. Konishi, Hideo & Ray, Debraj, 2003. "Coalition formation as a dynamic process," Journal of Economic Theory, Elsevier, vol. 110(1), pages 1-41, May.
  2. Chwe Michael Suk-Young, 1994. "Farsighted Coalitional Stability," Journal of Economic Theory, Elsevier, vol. 63(2), pages 299-325, August.
  3. Greenberg, J. & Weber, S., 1991. "Stable Coalition Structures with Unidimensional Set of Alternatives," Papers, Tilburg - Center for Economic Research 9133, Tilburg - Center for Economic Research.
  4. Debraj Ray & Rajiv Vohra, 2001. "Coalitional Power and Public Goods," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(6), pages 1355-1384, December.
  5. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
  6. Peleg, Bezalel & Rosenmuller, Joachim, 1992. "The least core, nucleolus, and kernel of homogeneous weighted majority games," Games and Economic Behavior, Elsevier, vol. 4(4), pages 588-605, October.
  7. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, Econometric Society, vol. 51(4), pages 1047-64, July.
  8. Moldovanu, Benny, 1992. "Coalition-proof nash equilibria and the core in three-player games," Games and Economic Behavior, Elsevier, vol. 4(4), pages 565-581, October.
  9. Greenberg Joseph & Weber Shlomo, 1993. "Stable Coalition Structures with a Unidimensional Set of Alternatives," Journal of Economic Theory, Elsevier, vol. 60(1), pages 62-82, June.
  10. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
  11. Peleg, Bezalel, 1980. "A theory of coalition formation in committees," Journal of Mathematical Economics, Elsevier, vol. 7(2), pages 115-134, July.
  12. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, Econometric Society, vol. 21(1), pages 128-140, April.
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Cited by:
  1. Le Breton, Michel & Ortuno-Ortin, Ignacio & Weber, Shlomo, 2006. "Gamson's Law and Hedonic Games," IDEI Working Papers 420, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Constantin Chiriac, 2008. "Economic Efficiency of EU Decision Making Process. Case Study: Measurement of Voting Power Indices of Romanian Parliament, 1996-2004," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 12(12(529)), pages 81-88, December.
  3. Shu Yu & Richard Jong-A-Pin, 2013. "Political Leader Survival: Does Competence Matter?," CESifo Working Paper Series 4465, CESifo Group Munich.
  4. Michel Breton & Ignacio Ortuño-Ortin & Shlomo Weber, 2008. "Gamson’s law and hedonic games," Social Choice and Welfare, Springer, vol. 30(1), pages 57-67, January.
  5. Andreas Schäfer & Thomas Steger, 2007. "Macroeconomic Consequences of Distributional Conflicts," CESifo Working Paper Series 2007, CESifo Group Munich.
  6. Julia Cagé, 2009. "Asymmetric information, rent extraction and aid efficiency," PSE Working Papers halshs-00575055, HAL.
  7. repec:hal:wpaper:halshs-00575055 is not listed on IDEAS

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