Coalition Formation in Games with Externalities

M.P. Montero

Research output: Working paperDiscussion paperOther research output

356 Downloads (Pure)

Abstract

This paper studies an extensive form game of coalition formation with random proposers in a situation where coalitions impose externalities on other players. It is shown that an agreement will be reached without delay provided that any set of coalitions profit from merging. Even under this strong condition, the formation of the grand coalition is not guaranteed. Therefore, the resulting coalition structure will not necessarily be efficient. The results of this model are compared with the related work of Ray and Vohra (GEB, 1999), which assumes that players move in a predetermined order. The game with random proposers tends to give a large advantage to the proposer, whereas the game with a rule of order tends to favour the responders and may not capture the competition between players. The game with random proposers yields more efficient results for some specific classes of games. However, the results of the two games cannot be ranked in general in terms of efficiency.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages40
Volume1999-121
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-121

Fingerprint

Merging
Profitability

Keywords

  • coalition formation
  • externalities
  • partition function
  • random proposers

Cite this

Montero, M. P. (1999). Coalition Formation in Games with Externalities. (CentER Discussion Paper; Vol. 1999-121). Tilburg: Microeconomics.
Montero, M.P. / Coalition Formation in Games with Externalities. Tilburg : Microeconomics, 1999. (CentER Discussion Paper).
@techreport{125b271e7a2b4123823d8c9fca961df1,
title = "Coalition Formation in Games with Externalities",
abstract = "This paper studies an extensive form game of coalition formation with random proposers in a situation where coalitions impose externalities on other players. It is shown that an agreement will be reached without delay provided that any set of coalitions profit from merging. Even under this strong condition, the formation of the grand coalition is not guaranteed. Therefore, the resulting coalition structure will not necessarily be efficient. The results of this model are compared with the related work of Ray and Vohra (GEB, 1999), which assumes that players move in a predetermined order. The game with random proposers tends to give a large advantage to the proposer, whereas the game with a rule of order tends to favour the responders and may not capture the competition between players. The game with random proposers yields more efficient results for some specific classes of games. However, the results of the two games cannot be ranked in general in terms of efficiency.",
keywords = "coalition formation, externalities, partition function, random proposers",
author = "M.P. Montero",
note = "Pagination: 40",
year = "1999",
language = "English",
volume = "1999-121",
series = "CentER Discussion Paper",
publisher = "Microeconomics",
type = "WorkingPaper",
institution = "Microeconomics",

}

Montero, MP 1999 'Coalition Formation in Games with Externalities' CentER Discussion Paper, vol. 1999-121, Microeconomics, Tilburg.

Coalition Formation in Games with Externalities. / Montero, M.P.

Tilburg : Microeconomics, 1999. (CentER Discussion Paper; Vol. 1999-121).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Coalition Formation in Games with Externalities

AU - Montero, M.P.

N1 - Pagination: 40

PY - 1999

Y1 - 1999

N2 - This paper studies an extensive form game of coalition formation with random proposers in a situation where coalitions impose externalities on other players. It is shown that an agreement will be reached without delay provided that any set of coalitions profit from merging. Even under this strong condition, the formation of the grand coalition is not guaranteed. Therefore, the resulting coalition structure will not necessarily be efficient. The results of this model are compared with the related work of Ray and Vohra (GEB, 1999), which assumes that players move in a predetermined order. The game with random proposers tends to give a large advantage to the proposer, whereas the game with a rule of order tends to favour the responders and may not capture the competition between players. The game with random proposers yields more efficient results for some specific classes of games. However, the results of the two games cannot be ranked in general in terms of efficiency.

AB - This paper studies an extensive form game of coalition formation with random proposers in a situation where coalitions impose externalities on other players. It is shown that an agreement will be reached without delay provided that any set of coalitions profit from merging. Even under this strong condition, the formation of the grand coalition is not guaranteed. Therefore, the resulting coalition structure will not necessarily be efficient. The results of this model are compared with the related work of Ray and Vohra (GEB, 1999), which assumes that players move in a predetermined order. The game with random proposers tends to give a large advantage to the proposer, whereas the game with a rule of order tends to favour the responders and may not capture the competition between players. The game with random proposers yields more efficient results for some specific classes of games. However, the results of the two games cannot be ranked in general in terms of efficiency.

KW - coalition formation

KW - externalities

KW - partition function

KW - random proposers

M3 - Discussion paper

VL - 1999-121

T3 - CentER Discussion Paper

BT - Coalition Formation in Games with Externalities

PB - Microeconomics

CY - Tilburg

ER -

Montero MP. Coalition Formation in Games with Externalities. Tilburg: Microeconomics. 1999. (CentER Discussion Paper).