Internal Hierarchy and Stable Coalition Structures

Massimo Morelli and In-Uck Park

No ECO2011/20, Economics Working Papers from European University Institute

Abstract: When an agent decides whether to join a coalition or not, she must consider both i) the expected strength of the coalition and ii) her position in the vertical structure within the coalition. We establish that there exists a positive relationship between the degree of inequality in remuneration across ranks within coalitions and the number of coalitions to be formed. When coalition size is unrestricted, in all stable systems the endogenous coalitions must be mixed and balanced in terms of members' abilities, with no segregation. When coalitions must have a fixed finite size, stable systems display segregation by clusters while maintaining the aforesaid feature within clusters.

Keywords: Stable Systems; Abilities; Hierarchy; Cyclic Partition (search for similar items in EconPapers)
JEL-codes: C71 D71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cdm, nep-gth and nep-net
Date: 2011
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Persistent link: http://EconPapers.repec.org/RePEc:eui:euiwps:eco2011/20

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