Internal Hierarchy and Stable Coalition Structures
AbstractWhen an agent decides whether to join a coalition or not, she must consider both i) the expected strength of the coalition and ii) her position in the vertical structure within the coalition. We establish that there exists a positive relationship between the degree of inequality in remuneration across ranks within coalitions and the number of coalitions to be formed. When coalition size is unrestricted, in all stable systems the endogenous coalitions must be mixed and balanced in terms of members' abilities, with no segregation. When coalitions must have a fixed finite size, stable systems display segregation by clusters while maintaining the aforesaid feature within clusters.
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Bibliographic InfoPaper provided by European University Institute in its series Economics Working Papers with number ECO2011/20.
Date of creation: 2011
Date of revision:
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Stable Systems; Abilities; Hierarchy; Cyclic Partition;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-04 (All new papers)
- NEP-BEC-2011-06-04 (Business Economics)
- NEP-CDM-2011-06-04 (Collective Decision-Making)
- NEP-GTH-2011-06-04 (Game Theory)
- NEP-NET-2011-06-04 (Network Economics)
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