Coalition Formation as a Dynamic Process

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  • 1 January 2000
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      • Published in RePEc
Abstract
We study coalition formation as an ongoing, dynamic process,with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be "justified" by the expectation of higher future value, compared to inaction. This future value,in turn,is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set.In addition, we study cyclical as well as stochastic equilibrium PCFs.
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