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Coalition Formation

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  • Ray, Debraj
  • Vohra, Rajiv

Abstract

This chapter surveys a sizable and growing literature on coalition formation. We refer to theories in which one or more groups of agents (“coalitions†) deliberately get together to jointly determine within-group actions, while interacting noncooperatively across groups. The chapter describes a variety of solution concepts, using an umbrella model that adopts an explicit real-time approach. Players band together, perhaps disband later and re-form in shifting alliances, all the while receiving payoffs at each date according to the coalition structure prevailing at the time. We use this model to nest two broad approaches to coalition formation, one based on cooperative game theory, the other based on noncooperative bargaining. Three themes that receive explicit emphasis are agent farsightedness, the description of equilibrium coalition structures, and the efficiency implications of the various theories.

Suggested Citation

  • Ray, Debraj & Vohra, Rajiv, 2015. "Coalition Formation," Handbook of Game Theory with Economic Applications,, Elsevier.
  • Handle: RePEc:eee:gamchp:v:4:y:2015:i:c:p:239-326
    DOI: 10.1016/B978-0-444-53766-9.00005-7
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    More about this item

    Keywords

    Coalition formation; Blocking; Bargaining; Farsightedness; Coalition structures; Core; Stable set;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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