Farsightedness and Cautiousness in Coalition Formation

33 Pages Posted: 26 Jul 2003

See all articles by Ana Mauleon

Ana Mauleon

Université Saint-Louis - Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Vincent J. Vannetelbosch

Center for Operations Research and Econometrics (CORE)

Date Written: June 2003

Abstract

We adopt the largest consistent set defined by Chwe [J. of Econ. Theory 63 (1994), 299-235] to predict which coalition structures are possibly stable when players are farsighted. We also introduce a refinement, the largest cautious consistent set, based on the assumption that players are cautious. For games with positive spillovers, many coalition structures may belong to the largest consistent set. The grand coalition, which is the efficient coalition structure, always belongs to the largest consistent set and is the unique one to belong to the largest cautious consistent set.

Keywords: Coalition Formation, Farsightedness, Cautiousness, Positive Spillovers, Largest Consistent Set

JEL Classification: C70, C71, C72, C78

Suggested Citation

Mauleon Echeverria, Ana Carmen and Vannetelbosch, Vincent J., Farsightedness and Cautiousness in Coalition Formation (June 2003). FEEM Working Paper No. 52.2003. Available at SSRN: https://ssrn.com/abstract=428020 or http://dx.doi.org/10.2139/ssrn.428020

Ana Carmen Mauleon Echeverria

Université Saint-Louis - Bruxelles ( email )

Brussels, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Vincent J. Vannetelbosch (Contact Author)

Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
1348 Louvain-la-Neuve, 1348
Belgium

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