Group Stability of Hierarchies in Games with Spillovers
In a recent paper, Demange (2004) has shown that hierarchical organizations can guarantee the existence of stable cooperative outcomes by appropriately allocating the blocking power to a subset of coalitions, the �teams�. This paper extends the analysis of Demange to cooperative problems with spillovers. We show that if blocking coalitions have �pessimistic expectations� on the reaction of outsiders, in all cooperative problems there exists an allocation which is blocked by no team. We also study the case of �passive expectations�, for which the same result holds in all games with negative spillovers, while stable allocations may fail to exist in games with positive spillovers. In the latter class of games, however, hierarchies are shown to be the most stable organizational forms.
|Date of creation:||2006|
|Contact details of provider:|| Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia|
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ray, Debraj & Vohra, Rajiv, 1997.
"Equilibrium Binding Agreements,"
Journal of Economic Theory,
Elsevier, vol. 73(1), pages 30-78, March.
- Ray, D. & Vohra, R., 1993. "Equilibrium Binding Agreements," Papers 21, Boston University - Department of Economics.
- Gabrielle Demange, 2004. "On Group Stability in Hierarchies and Networks," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 754-778, August.
- Gabrielle Demange, 2004. "On group stability in hierarchies and networks," Post-Print halshs-00581662, HAL.
- Kaneko, Mamoru & Wooders, Myrna Holtz, 1982. "Cores of partitioning games," Mathematical Social Sciences, Elsevier, vol. 3(4), pages 313-327, December.
- Mamoru Kaneko & Myrna Holtz Wooders, 1982. "Cores of Partitioning Games," Cowles Foundation Discussion Papers 620, Cowles Foundation for Research in Economics, Yale University.
- Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-1064, July.
- Yukihiko Funaki & Takehiko Yamato, 1999. "The core of an economy with a common pool resource: A partition function form approach," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(2), pages 157-171.
- Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
- Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-1146, September. Full references (including those not matched with items on IDEAS)