IDEAS home Printed from https://ideas.repec.org/p/may/mayecw/n810798.html
   My bibliography  Save this paper

Dynamic Coalition Formation and the Core

Author

Listed:
  • Tone Dieckmann;

    (Economics, National University of Ireland, Maynooth)

  • Ulrich Schwalbe

    (Department of Economics, University of Mannheim)

Abstract

This paper presents a dynamic model of endogenous coalition formation in cooperative games with transferable utility. The players are boundedly rational. At each time step, a player decides which of the existing coalitions to join, and demands a payoff. These decisions are determined by a (non- cooperative) best-reply rule, given the coalition structure and allocation in the previous period. We show that absorbing states of the process exist if the game is essential. Further, if the players are allowed to experiment with myopically suboptimal strategies whenever there are potential gains from trade, an isomorphism between the set of absorbing states of the process and the set of core allocations can beestablished, and the process converges to one of these states with probability one whenever the core is non-empty. This result holds independently of the form of the characteristic function.

Suggested Citation

  • Tone Dieckmann; & Ulrich Schwalbe, 1998. "Dynamic Coalition Formation and the Core," Economics Department Working Paper Series n810798, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n810798
    as

    Download full text from publisher

    File URL: http://repec.maynoothuniversity.ie/mayecw-files/N810798.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    2. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    3. Noldeke Georg & Samuelson Larry, 1993. "An Evolutionary Analysis of Backward and Forward Induction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 425-454, July.
    4. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    5. Kalai, Ehud & Postlewaite, Andrew & Roberts, John, 1979. "A group incentive compatible mechanism yielding core allocations," Journal of Economic Theory, Elsevier, vol. 20(1), pages 13-22, February.
    6. Murali Agastya, 1997. "Adaptive Play in Multiplayer Bargaining Situations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(3), pages 411-426.
    7. Tone Dieckmann, 1997. "The Evolution of conventions with Mobile Players," Economics Department Working Paper Series n720897, Department of Economics, National University of Ireland - Maynooth.
    8. Perry, Motty & Reny, Philip J, 1994. "A Noncooperative View of Coalition Formation and the Core," Econometrica, Econometric Society, vol. 62(4), pages 795-817, July.
    9. Allan M. Feldman, 1973. "Bilateral Trading Processes, Pairwise Optimally, and Pareto Optimality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(4), pages 463-473.
    10. Ulrich Schwalbe & Siegfried K. Berninghaus, 1996. "Conventions, local interaction, and automata networks," Journal of Evolutionary Economics, Springer, vol. 6(3), pages 297-312.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arnold, Tone & Schwalbe, Ulrich, 2002. "Dynamic coalition formation and the core," Journal of Economic Behavior & Organization, Elsevier, vol. 49(3), pages 363-380, November.
    2. Tone Dieckmann & Ulrich Schwalbe, 2000. "Dynamic Coalition Formation and the Core," Econometric Society World Congress 2000 Contributed Papers 1878, Econometric Society.
    3. Ben-Shoham, Assaf & Serrano, Roberto & Volij, Oscar, 2004. "The evolution of exchange," Journal of Economic Theory, Elsevier, vol. 114(2), pages 310-328, February.
    4. H. Peyton Young, 1996. "The Economics of Convention," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 105-122, Spring.
    5. Rozen, Kareen, 2013. "Conflict leads to cooperation in demand bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 35-42.
    6. Wallace, Chris & Young, H. Peyton, 2015. "Stochastic Evolutionary Game Dynamics," Handbook of Game Theory with Economic Applications,, Elsevier.
    7. Newton, Jonathan, 2012. "Recontracting and stochastic stability in cooperative games," Journal of Economic Theory, Elsevier, vol. 147(1), pages 364-381.
    8. Roland Pongou & Roberto Serrano, 2009. "A Dynamic Theory of Fidelity Networks with an Application to the Spread of HIV/AIDS," Working Papers 2009-2, Brown University, Department of Economics.
    9. Oechssler, Jorg, 1997. "An Evolutionary Interpretation of Mixed-Strategy Equilibria," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 203-237, October.
    10. Ania, Ana B. & Wagener, Andreas, 2009. "The Open Method of Coordination (OMC) as an Evolutionary Learning Process," Hannover Economic Papers (HEP) dp-416, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    11. Christoph Kuzmics & Daniel Rodenburger, 2020. "A case of evolutionarily stable attainable equilibrium in the laboratory," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 685-721, October.
    12. Peyton Young, H., 1998. "Individual learning and social rationality1," European Economic Review, Elsevier, vol. 42(3-5), pages 651-663, May.
    13. Roberto Serrano & Oscar Volij, 2008. "Mistakes in Cooperation: the Stochastic Stability of Edgeworth's Recontracting," Economic Journal, Royal Economic Society, vol. 118(532), pages 1719-1741, October.
    14. Blume, Andreas & Arnold, Tone, 2004. "Learning to communicate in cheap-talk games," Games and Economic Behavior, Elsevier, vol. 46(2), pages 240-259, February.
    15. Noldeke, Georg & Samuelson, Larry, 1997. "A Dynamic Model of Equilibrium Selection in Signaling Markets," Journal of Economic Theory, Elsevier, vol. 73(1), pages 118-156, March.
    16. Lim, Wooyoung & Neary, Philip R., 2016. "An experimental investigation of stochastic adjustment dynamics," Games and Economic Behavior, Elsevier, vol. 100(C), pages 208-219.
    17. Michihiro, Kandori & Rob, Rafael, 1998. "Bandwagon Effects and Long Run Technology Choice," Games and Economic Behavior, Elsevier, vol. 22(1), pages 30-60, January.
    18. Newton, Jonathan & Sawa, Ryoji, 2015. "A one-shot deviation principle for stability in matching problems," Journal of Economic Theory, Elsevier, vol. 157(C), pages 1-27.
    19. Berninghaus, Siegfried K. & Ehrhart, Karl-Martin & Keser, Claudia, 2002. "Conventions and Local Interaction Structures: Experimental Evidence," Games and Economic Behavior, Elsevier, vol. 39(2), pages 177-205, May.
    20. Rozen, Kareen, 2008. "Conflict Leads to Cooperation in Nash Bargaining," Working Papers 39, Yale University, Department of Economics.

    More about this item

    Keywords

    TU Games; Coalition Formation; Bounded Rationality; Core;
    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:may:mayecw:n810798. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge The email address of this maintainer does not seem to be valid anymore. Please ask the person in charge to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/demayie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.