Internal Hierarchy and Stable Coalition Structures

Massimo Morelli () and In-Uck Park

No 528, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: In deciding whether to join a coalition or not, an agent must consider both i) the expected power of the coalition and ii) her position in the vertical structure within the coalition. We establish the existence of a positive relationship between the degree of inequality in remuneration across ranks within coalitions and the number of coalitions to be formed endogenously in stable systems. An inherent feature of such coalitions is that they are mixed and balanced, rather than segregated, in terms of members abilities. When the surplus of a coalition is assumed to be linear in its relative power conditional on its size, we also establish the existence of stable systems and characterise them fully: a system is stable if and only if all coalitions are of an esocient size and every agent is paid her marginal contribution. (JEL Codes: C71, D71) Keywords: Stable systems, Abilities, Hierarchy, Cyclic partition.

Date: 2014
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-mic
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Internal hierarchy and stable coalition structures (2016)
Working Paper: Internal Hierarchy and Stable Coalition Structures (2011)
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