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Abstract

We 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 his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and efficiency.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.47.

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Date of creation: Jun 2009
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Handle: RePEc:fem:femwpa:2009.47

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Related research

Keywords: Networks; Coalition Structures; Contractual Stability; Allocation Rules;

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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

This paper has been announced in the following NEP Reports:

• NEP-ALL-2009-07-28 (All new papers)
• NEP-CDM-2009-07-28 (Collective Decision-Making)
• NEP-GTH-2009-07-28 (Game Theory)
• NEP-NET-2009-07-28 (Network Economics)
• NEP-SOC-2009-07-28 (Social Norms & Social Capital)

References

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