Stable Sets in Matching Problems with Coalitional Sovereignty and Path Dominance
17 Pages Posted: 10 Jun 2016
Date Written: April 20, 2016
We study von Neumann Morgenstern stable sets for one-to-one matching problems under the assumption of coalitional sovereignty, meaning that a deviating coalition of players does not have the power to arrange the matches of agents outside the coalition. We study both the case of pairwise and coalitional deviations. We argue further that dominance has to be replaced by path dominance along the lines of van Deemen (1991) and Page and Wooders (2009). This results in the pairwise myopic vNM set and the myopic vNM set, respectively. We obtain a unique prediction for both types of stable sets: the set of matchings that belong to the core. We also show that the pairwise and coalitional analogues of the level-1 farsighted set yield the core as the unique prediction.
Keywords: Matching problems, stable sets, coalitional sovereignty
JEL Classification: C70, C78
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