Coalitions, agreements and efficiency

Effrosyni Diamantoudi () and Licun Xue ()

No 2002047, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

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: C71 C72 (search for similar items in EconPapers)
Date: 2002-09
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Coalitions, agreements and efficiency (2007)
Working Paper: Coalitions, Agreements and Efficiency
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2002047

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