Expectation Formation Rules and the Core of Partition Function Games

38 Pages Posted: 20 May 2013

See all articles by Francis Bloch

Francis Bloch

University of Angers - Research Group in Quantitative Saving (GREQAM); National Center for Scientific Research (CNRS)

Anne van den Nouweland

University of Oregon - Department of Economics

Date Written: May 13, 2013

Abstract

This paper proposes axiomatic foundations of expectation formation rules, by which deviating players anticipate the reaction of external players in a partition function game. The axioms single out the projection rule among the rules that depend on the current partition and the pessimistic rule among the ones that are independent of the current partition. This analysis suggests that the projection core and the pessimistic core are natural candidates to study the stability of games in partition function form, and we compute these cores in two standard applications of coalition formation with externalities, namely cartels and public goods.

Keywords: Partition Function Games, Core, Expectation Formation, Axiomatization

JEL Classification: C71, C70

Suggested Citation

Bloch, Francis and van den Nouweland, Anne, Expectation Formation Rules and the Core of Partition Function Games (May 13, 2013). Available at SSRN: https://ssrn.com/abstract=2267130 or http://dx.doi.org/10.2139/ssrn.2267130

Francis Bloch

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

National Center for Scientific Research (CNRS) ( email )

54, boulevard Raspail
Paris, 75006
France

Anne Van den Nouweland (Contact Author)

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States
541-346-1267 (Phone)
541-346-1243 (Fax)

HOME PAGE: http://pages.uoregon.edu/annev/

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