Formation of Collective Decision-Making Units: Stability and a Solution

Fan-chin Kung ()

Game Theory and Information from EconWPA

Abstract: We study how individuals divide themselves into coalitions and choose a public alternative for each coalition. When preferences have consecutive support and coalition feasible sets are positively population- responsive, the proposed consecutive benevolence solution generates allocations belonging to the coalition structure core and that are also Tiebout equilibria. However, when each coalition follows a single-valued collective decision rule, the coalition structure core may be empty. Our results show that if individual preferences are, in a sense, similar and if members can be as well off when a coalition enlarges, then a stable formation of collective decision-making units can be guaranteed. A predetermined decision rule makes coalitions less stable.

JEL-codes: C62 C71 D71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-dcm and nep-gth
Date: Written 2005-05-05
Note: Type of Document - pdf; pages: 25
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:0505002

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