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Sequentially Stable Coalition Structures

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Author Info
Funaki, Y.
Yamato, T. (Tilburg University, Center for Economic Research)
Abstract

In this paper, we examine the question of which coalition structures farsighted players form in coalition formation games with externalities. We introduce a stability concept for a coalition structure called a sequentially stable coalition structure. Our concept of domination between two coalition structures is based on a ?step-by-step? approach to describe negotiation steps concretely by restricting how coalition structures can change: when one coalition structure is changed to another one, either (i) only one merging of two separate coalitions into a coalition occurs, or (ii) only one breaking up of a coalition into two separate coalitions happens. As applications of our stability notion, we show that the efficient grand coalition structure can be sequentially stable in simple partition function form games and common pool resource games.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2007-96.

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Date of creation: 2007
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Handle: RePEc:dgr:kubcen:200796

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Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
D62 - Microeconomics - - Welfare Economics - - - Externalities

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  1. Weitzman, Martin L., 1974. "Free access vs private ownership as alternative systems for managing common property," Journal of Economic Theory, Elsevier, vol. 8(2), pages 225-234, June. [Downloadable!] (restricted)
  2. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May. [Downloadable!] (restricted)
  3. Diamantoudi, Effrosyni & Xue, Licun, 2007. "Coalitions, agreements and efficiency," Journal of Economic Theory, Elsevier, vol. 136(1), pages 105-125, September. [Downloadable!] (restricted)
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  4. Effrosyni Diamantoudi & Licun Xue, 2003. "Farsighted stability in hedonic games," Social Choice and Welfare, Springer, vol. 21(1), pages 39-61, 08. [Downloadable!] (restricted)
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  5. Bogomolnaia, Anna & Jackson, Matthew O., 2002. "The Stability of Hedonic Coalition Structures," Games and Economic Behavior, Elsevier, vol. 38(2), pages 201-230, February. [Downloadable!] (restricted)
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  6. Yukihiko Funaki & Takehiko Yamato, 1999. "The core of an economy with a common pool resource: A partition function form approach," International Journal of Game Theory, Springer, vol. 28(2), pages 157-171. [Downloadable!] (restricted)
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