Stable and efficient coalitional networks
AbstractWe develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, where the network specifies the nature of the relationship each individual has with her coalition members and with individuals outside her coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concepts of strong stability and of contractual stability. Contractual stability imposes that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. Requiring the consent of coalition members under the simple majority or unanimity decision rule may help to reconcile stability and effiency. Moreover, this new framework can provide in- sights that one cannot obtain if coalition formation and network formation are tackled separately and independently.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2011039.
Date of creation: 01 Sep 2011
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networks; coalition structures; stability; efficiency;
Find related papers by JEL classification:
- A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
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