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Stability and fairness in models with a multiple membership

  • LE BRETON, Michel

    (Université de Toulouse 1, GREMAQ and IDEI, Toulouse, France)

  • MORENO-TERNERO, Juan D.

    (Universidad de Malaga, Spain; Universidad Pablo de Olavide, Seville, Spain; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • SAVVATEEV, Alexei

    (New Economic School, Moscow, Russia)

  • WEBER, Shlomo

    (Southern Methodist University, Dallas, USA and New Economic School, Moscow, Russia)

This article studies a model of coalition formation for the joint production (and finance) of public projects, in which agents may belong to multiple coalitions. We show that, if projects are divisible, there always exists a stable (secession-proof) structure, i.e., a structure in which no coalition would reject a proposed arrangement. When projects are in- divisible, stable allocations may fail to exist and, for those cases, we resort to the least core in order to estimate the degree of instability. We also examine the compatibility of stability and fairness on metric environments with indivisible projects. To do so, we explore, among other things, the performance of several well-known solutions (such as the Shapley value, the nucleolus, or the Dutta-Ray value) in these environments.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010079.

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Date of creation: 01 Dec 2010
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Handle: RePEc:cor:louvco:2010079
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