Some of the specific topics addressed include: advances in the theory of large co-operative games; non co-operative models of coalition formation; a survey of the partition function in the formation of coalitions; far-sightedness in coalition formation; coalition stability; coalition formation in industrialized economics, trade theory, environmental economics and public finance.
We develop a model of coalition formation based on personal proximities among the players of an n-person game. Several examples are worked out in detail, showing that certain coalitions are much more stable than others, and/or much more likely to form than others. We also consider the dynamics of such coalition-formation. By a numerical example, we show that small changes in the initial conditions can lead to very different results in the coalitions formed in a given game.
This paper examines the endogenous formation of coalitions that provide public goods in which players implement a minimum participation requirement before deciding whether to join. We demonstrate theoretically that payoff-maximizing players will vote to implement efficient participation requirements and these coalitions will form. However, we also demonstrate that if some players are averse to inequality they can cause inefficient outcomes. Inequality-averse players can limit free riding by implementing larger than efficient coalitions or by blocking efficient coalitions from forming. We test the theory with experimental methods and observe individual behavior and coalition formation consistent with a model of inequality-averse players.
This paper argues that the sign of external effects of coalition formation provides a useful organizing principle in examining economic coalitions. In many interesting economic games, coalition formation creates either negativee externalities or positive externalities for nonmembers. Examples of negative externalities are research coalitions and customs unions. Examples of positive externalities include output cartels and public goods coalitions. I characterize and compare stable coalition structures under the following three rules of coalition formation: the Open Membership game of Yi and Shin 1995 , the Coalition Unanimity game of Bloch 1996 , and the Equilibrium Binding Agreements of Ray and Vohra 1994.
This paper surveys the recent literature on the endogenous formation of economic coalitions, in particular, the partition function literature that allows for externalities across coalitions. Various economic coalitions are classified either as coalitions with positive externalities (output cartels, Ramp;D coalitions with spillovers, public-goods (environmental) coalitions, free-trade areas) or as coalitions with negative externalities (joint ventures with efficiency gains, customs unions). I review several games of coalition formation (the Single Coalition Formation game, the Open Membership game, the Exclusive Membership game, the Coalition Unanimity game, the Equilibrium Binding Agreements game) and examine equilibrium coalition structures in these games.
Coalition Formation and Social Choice provides a unified and comprehensive study of coalition formation and collective decision-making in committees. It discusses the main existing theories including the size principle, conflict of interest theory, dominant player theory, policy distance theory and power excess theory. In addition, the book offers new theories of coalition formation in which the endogenous formation of preferences for coalitions is basic. Both simple game theory and social choice theory are extensively applied in the treatment of the theories. This combined application not only leads to new theories but also offers a new and fresh perspective on coalition formation and collective decision-making in committees. The book covers the fundamental concepts and results of social choice theory including Arrow's Impossibility Theorem. Furthermore, it gives a coherent treatment of the theory of simple games. Besides more traditional topics in simple game theory like power indices, it also introduces new aspects of simple games such as the Chow parameter, the Chow vector and the notion of similar games.
"The aim of this dissertation is to study a class of endogenous coalition formation problems with externalities where each agent's payoff depends not only on the coalition he or she belongs to but also how others partition themselves. This dissertation contains both theoretical and application elements. At the theoretical front (Chapter 1 and Chapter 2), two dynamic coalition formation games with endogenous choice of proposers are introduced. We prove that each game admits a dynamically efficient Markov perfect equilibrium. Moreover, we prove that the equilibrium payoff allocation of the game presented in Chapter 2 is unique." --
