Coalitions, Agreements and Efficiency

Effrosyni Diamantoudi (effrosyni.diamantoudi@concordia.ca) and Licun Xue (licun.xue@mcgill.ca)

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: If agents negotiate openly and form coalitions, can they reach efficient agreements? We address this issue within a class of coalition formation games with externalities where agents' preferences depend solely on the coalition structures they are associated with. We derive Ray and Vohra's (1997) notion of equilibrium binding agreements using von Neumann and Morgenstern abstract stable set and then extend it to allow for arbitrary coalitional deviations (as opposed to nested deviations assumed originally). We show that, while the new notion facilitates the attainment of efficient agreements, inefficient agreements can nevertheless arise

Keywords: Coalition formation; externalities; efficiency; agreements (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Pages: 23
New Economics Papers: this item is included in nep-pol
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Coalitions, agreements and efficiency (2007)
Working Paper: Coalitions, agreements and efficiency (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2002-9

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