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Formation of Collective Decision-Making Units: Stability and a Solution

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  • Fan-chin Kung

    (Academia Sinica)

Abstract

We study how individuals divide themselves into coalitions and choose a public alternative for each coalition. When preferences have consecutive support and coalition feasible sets are positively population- responsive, the proposed consecutive benevolence solution generates allocations belonging to the coalition structure core and that are also Tiebout equilibria. However, when each coalition follows a single-valued collective decision rule, the coalition structure core may be empty. Our results show that if individual preferences are, in a sense, similar and if members can be as well off when a coalition enlarges, then a stable formation of collective decision-making units can be guaranteed. A predetermined decision rule makes coalitions less stable.

Suggested Citation

  • Fan-chin Kung, 2005. "Formation of Collective Decision-Making Units: Stability and a Solution," Game Theory and Information 0505002, EconWPA, revised 21 Jun 2005.
  • Handle: RePEc:wpa:wuwpga:0505002
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    Cited by:

    1. Fan-Chin Kung, 2006. "An Algorithm for Stable and Equitable Coalition Structures with Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(3), pages 345-355, August.
    2. Fan-chin Kung, 2005. "Coalition Formation with Local Public Goods and Network Effect," Game Theory and Information 0506007, EconWPA.

    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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