Order Matters: On Maskin's Coalition Formation Bargaining Model

8 Pages Posted: 5 Oct 2011

See all articles by Zhigang Cao

Zhigang Cao

Beijing Jiaotong University - School of Economics and Management

Xiaoguang Yang

Chinese Academy of Sciences (CAS)

Date Written: October 5, 2011

Abstract

We first show through a counter-example that the existence result of Maskin: Bargaining, coalitions and externalities, Presidential address of the Econometric Society, 2003] does not extend beyond three players.Intuitively, the bargaining may not be able to continue because there may be no optimal offer at all. Then we consider the effect of bargaining orders for the three player coalitional games with no externality (i.e. the characteristic function form game. Super-additivity is not assumed). It is proved that order does matter: the first position is always the best of all. However, the second position may be worse than the third one.

Keywords: Maskin bargaining, coalition formation, limited efficiency, bargaining order

JEL Classification: C78, C71

Suggested Citation

Cao, Zhigang and Yang, Xiaoguang, Order Matters: On Maskin's Coalition Formation Bargaining Model (October 5, 2011). Available at SSRN: https://ssrn.com/abstract=1938915 or http://dx.doi.org/10.2139/ssrn.1938915

Zhigang Cao (Contact Author)

Beijing Jiaotong University - School of Economics and Management ( email )

China

Xiaoguang Yang

Chinese Academy of Sciences (CAS) ( email )

52 Sanlihe Rd.
Datun Road, Anwai
Beijing, Xicheng District 100864
China

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