We study coalition formation problems with general externalities. We prove that if expectations are not prudent a stable coalitions structure can fail to exist. Under prudent expectations a stable coalition structure exists if the set of admissible coalitions is single-lapping. This assumption also guarantees the existence of a stable and efficient coalition structure. However, under this assumption, the stable set is not a singleton, and no stable and efficient strategy-proof revelation mechanism exists, differently from the case in which agents care only about the coalition they belong to. However, the stable correspondence is implementable in Nash equilibrium.

Coalition Formation Problems With Externalities

Matteo Maria Triossi Verondini
Writing – Original Draft Preparation
2022-01-01

Abstract

We study coalition formation problems with general externalities. We prove that if expectations are not prudent a stable coalitions structure can fail to exist. Under prudent expectations a stable coalition structure exists if the set of admissible coalitions is single-lapping. This assumption also guarantees the existence of a stable and efficient coalition structure. However, under this assumption, the stable set is not a singleton, and no stable and efficient strategy-proof revelation mechanism exists, differently from the case in which agents care only about the coalition they belong to. However, the stable correspondence is implementable in Nash equilibrium.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10278/5012440
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