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On the Computation of Stability in Multiple Coalition Formation Games

Author

Listed:
  • M Sáiz

    ()

  • Eligius Hendrix

    ()

  • Niels Olieman

    ()

Abstract

In non-cooperative models of coalition formation, players have to decide whether or not to participate in a coalition (alliance). Game theoretic analyses of the formation of alliances in games with externalities, stress the difficulties in designing self-enforcing treaties because of free-riding. The presence of a strong free-rider incentive prevents most alliances of being stable and/or effective. This paper focuses on computing stability in a game on multiple coalition formation with membership rules and different transfer schemes. A new mathematical programming notation for game theory concepts is outlined. To compute stability, the new notation is used for implementation into computer coding. Implementation and computation aspects are discussed. Numerical illustration of the algorithm shows that stability varies with the applied membership rules and transfer schemes. An application of coalition formation to International Environmental Agreements (lEAs) is provided. Copyright Springer Science+Business Media, Inc. 2006

Suggested Citation

  • M Sáiz & Eligius Hendrix & Niels Olieman, 2006. "On the Computation of Stability in Multiple Coalition Formation Games," Computational Economics, Springer;Society for Computational Economics, vol. 28(3), pages 251-275, October.
  • Handle: RePEc:kap:compec:v:28:y:2006:i:3:p:251-275
    DOI: 10.1007/s10614-006-9047-1
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    References listed on IDEAS

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    1. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, December.
    2. Thoron, S., 1999. "Market Organization: Noocooperative Models of Coalition Formation," G.R.E.Q.A.M. 99a30, Universite Aix-Marseille III.
    3. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    4. Sang-Seung, Yi, 1996. "Endogenous formation of customs unions under imperfect competition: open regionalism is good," Journal of International Economics, Elsevier, vol. 41(1-2), pages 153-177, August.
    5. Finus, Michael & Sáiz, M. Elena & Hendrix, Eligius M.T., 2009. "An empirical test of new developments in coalition theory for the design of international environmental agreements," Environment and Development Economics, Cambridge University Press, vol. 14(01), pages 117-137, February.
    6. Gerard Weisbuch & Alan Kirman & Dorothea Herreiner, 1995. "Market Organization," Working Papers 95-11-102, Santa Fe Institute.
    7. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, vol. 26(2), pages 286-336, January.
    8. Juan-Carlos Altamirano-Cabrera & Michael Finus, 2006. "Permit trading and stability of international climate agreements," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 19-48, May.
    9. EYCKMANS, Johan & FINUS, Michael, 2003. "Coalition formation in a global warming game : how the design of protocols affects the success of environmental treaty-making," CORE Discussion Papers 2003088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    11. Michael Finus & Juan-Carlos Altamirano-Cabrera & Ekko Ierland, 2005. "The effect of membership rules and voting schemes on the success of international climate agreements," Public Choice, Springer, vol. 125(1), pages 95-127, July.
    12. Bosello, Francesco & Buchner, Barbara & Carraro, Carlo & Raggi, Davide, 2003. "Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations," CEPR Discussion Papers 3606, C.E.P.R. Discussion Papers.
    13. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
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    Citations

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    Cited by:

    1. Marta Biancardi & Giovanni Villani, 2010. "International Environmental Agreements with Asymmetric Countries," Computational Economics, Springer;Society for Computational Economics, vol. 36(1), pages 69-92, June.
    2. Andrew Dowell & Michael Wooldridge & Peter McBurney, 2007. "The Computational Difficulty of Bribery in Qualitative Coalitional Games," Working Papers 2007.100, Fondazione Eni Enrico Mattei.
    3. repec:spr:ieaple:v:17:y:2017:i:5:d:10.1007_s10784-017-9351-3 is not listed on IDEAS
    4. Hans-Peter Weikard & Rob Dellink & Ekko Ierland, 2010. "Renegotiations in the Greenhouse," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(4), pages 573-596, April.
    5. Marta Biancardi & Giovanni Villani, 2011. "Largest Consistent Set in International Environmental Agreements," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 407-423, October.
    6. Giovanni Villani & Marta Biancardi, 2011. "Largest Consistent Set in International Environmental Agreements," Quaderni DSEMS 04-2011, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.

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