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Coalition Formation as a Dynamic Process

Author

Listed:
  • Hideo Konishi

    (Boston College)

  • Debraj Ray

    (New York University)

Abstract

We study coalition formation as an ongoing, dynamic process,with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be "justified" by the expectation of higher future value, compared to inaction. This future value,in turn,is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set.In addition, we study cyclical as well as stochastic equilibrium PCFs.

Suggested Citation

  • Hideo Konishi & Debraj Ray, 2000. "Coalition Formation as a Dynamic Process," Boston College Working Papers in Economics 478, Boston College Department of Economics, revised 15 Apr 2002.
  • Handle: RePEc:boc:bocoec:478
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    References listed on IDEAS

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    More about this item

    Keywords

    coalition formation; farsightedness; dynamic equilibrium;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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