Stable Coalitions

Carlo Carraro () and Carmen Marchiori

No 3258, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper examines recent theoretical developments in the theory of coalition stability. It focuses on the relationship between the incentives to defect from a coalition, the size of the resulting equilibrium coalition structure and the different assumptions on membership rules, coalition behaviour, players? conjectures, etc. The Paper considers several cases. Simultaneous versus sequential moves, linear versus circular order of moves, Nash versus rational conjectures, open versus exclusive membership, monotonic versus non-monotonic payoff functions and orthogonal versus non-orthogonal reaction functions. The profitable and stable coalition will be derived for each possible configuration of the rules of the game, the pay-off functions and the membership rules. The results show that the size of the profitable and stable coalition highly depends on the chosen configuration and that the equilibrium outcome ranges from a small coalition with a few signatories to full cooperation. The Paper explores under which conditions a large stable coalition is likely to emerge, and identifies the institutional setting that favours the emergence of such coalition.

Keywords: Agreements; Coaltions; Incentives; Negotiations; Stability (search for similar items in EconPapers)
JEL-codes: H00 H20 H30 (search for similar items in EconPapers)
Date: 2002-03
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Chapter: Stable coalitions (2003)
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