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A Bargaining Set Based on External and Internal Stability and Endogenous Coalition Formation

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Author Info

  • Lazarova, E.A.
  • Borm, P.E.M.
  • Montero, M.P.
  • Reijnierse, J.H.

    (Tilburg University, Center for Economic Research)

Abstract

A new bargaining set based on notions of both internal and external stability is developed in the context of endogenous coalition formation.It allows to make an explicit distinction between within-group and outsidegroup deviation options.This type of distinction is not present in current bargaining sets.For the class of weighted majority games, the outcomes in the bargaining set containing a minimal winning coalition are characterized.Furthermore, it is shown that the bargaining set of any homogeneous weighted majority game contains an outcome for which the underlying coalition structure consists of a minimal winning coalition and its complement.The paper also introduces a new class of games called cooperation externalities games.For a symmetric cooperation externalities game conditions are provided such that every outcome in the bargaining set supports the same coalition structure.This coalition structure consists of one coalition of all players with an externality parameter higher than one and a collection of singleton coalitions, one for every player with a cooperation externality parameter lower than one

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2006-16.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:200616

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Web page: http://center.uvt.nl

Related research

Keywords: Bargaining set; endogenous colation; formation; internal and external stability;

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References

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  1. Maschler, Michael, 1992. "The bargaining set, kernel, and nucleolus," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 18, pages 591-667 Elsevier.
  2. Massimo Morelli & Maria Montero, 2001. "The Demand Bargaining Set: General Characterization and Application to Majority Games," Economics Working Papers 0011, Institute for Advanced Study, School of Social Science.
  3. Burani, Nadia & Zwicker, William S., 2003. "Coalition formation games with separable preferences," Mathematical Social Sciences, Elsevier, vol. 45(1), pages 27-52, February.
  4. Zhou Lin, 1994. "A New Bargaining Set of an N-Person Game and Endogenous Coalition Formation," Games and Economic Behavior, Elsevier, vol. 6(3), pages 512-526, May.
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Cited by:
  1. Emiliya Lazarova & Peter Borm & Maria Montero & Hans Reijnierse, 2011. "A bargaining set for monotonic simple games based on external and internal stability," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer, vol. 19(1), pages 54-66, July.

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