October 24, 2011

Stable and Efficient Coalitional Networks

by Jean-François Caulier, Ana Mauleon, Jose J. Sempere-Monerris and Vincent Vannetelbosh

- We define the notion of coalitional network to represent a network and a coalition structure, where the network specifies the nature of the relationship each individual has with her coalition members and with individuals outside her coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concepts of strong stability and of contractual stability. Contractual stability imposes that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. Requiring the consent of coalition members under the simple majority or unanimity decision rule may help to reconcile stability and efficiency. Moreover, this new framework can provide insights that one cannot obtain if coalition formation and network formation are tackled separately and independently.

Jean-François Caulier, Ana Mauleon, Jose J. Sempere-Monerris and Vincent Vannetelbosh (2011). "Stable and Efficient Coalitional Networks." Core Discussion Paper No. 2011/39, Jul 2011.