Coral Games and the Core of Cores

James W. Bono ()

No 2008-18, Working Papers from American University, Department of Economics

Abstract: Casual observation reveals that groups of people interact on many levels simultane- ously. Examples include political party formation and interaction; the interaction of ¯rms in research consortia; and labor union and confederation formation. In this paper, a model of hierarchical group structures is developed. The model generalizes the existing coalitional theory in several ways and reveals a new connection between characteristic and partition function theories; that they are both valuable components of an overall theory. The stability concept that emerges is called the core of cores. Several results are presented, including necessary and su±cient conditions for the existence of the core of cores and a theorem that demonstrates the relationship between the cores of each level of the organizational structure and the core of cores. The results establish that stability can arise from any combination of stable and unstable components, and suggest a re-thinking of existing coalitional models, taking into account the e®ect of \nearby" games. The framework developed here has immediate applications to various topics in political econ- omy and industrial organization, such as representative voting and corporate mergers.

Keywords: The Core; Complexity in Game Theory; Hierarchies of Groups (search for similar items in EconPapers)
JEL-codes: C62 C71 C79 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-hpe
Date: 2008-09

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Persistent link: http://EconPapers.repec.org/RePEc:amu:wpaper:1808

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