## A Game-Theoretic Perspective on Coalition FormationThe formation of coalitions to achieve both collaborative and competitive goals is a phenomenon we see all around us. The list is long and varied: production cartels, political lobbies, customs unions, environmental coalitions, and ethnic alliances are just a few everyday instances. Drawing upon and extending his inaugural Lipsey Lectures at the University of Essex, Debraj Ray looks at coalition formation from the perspective of game theory. How are agreements determined? Which coalitions will form? And are such agreements invariably efficient from a social perspective? Ray brings together developments in both cooperative and noncooperative game theory to study the analytics of coalition formation and binding agreements. This book concentrates on pure theory, but discusses several potential applications, such as oligopoly and the provision of public goods. |

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### Contents

CHAPTER 3Coalitions Cooperation and Noncooperation | |

Part 2A Bargaining Approach To Coalition Formation | |

CHAPTER 4Irreversible Agreements | |

Symmetric Games | |

CHAPTER 6Applications | |

CHAPTER 10Reversible Agreements With Externalities | |

Part 3A Blocking Approach to Coalition Formation | |

CHAPTER 11Blocking | |

CHAPTER 12Irreversible Commitments | |

CHAPTER 13The Blocking Approach in Real Time | |

CHAPTER 14Directions | |

References | |

The General Case | |

CHAPTER 8A Framework for Reversible Agreements | |

CHAPTER 9Reversible Agreements Without Externalities | |

Author Index | |

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### Common terms and phrases

absorbing limit acceptable proposal agents algorithm approval committee argument assumption average worth bargaining frictions Chapter characteristic function coalition formation coalition map coalitional equilibrium Coase theorem commitments condition consider converge cooperative game theory coordination game defined described deterministic EPCF discount factor discussion easy Economic EEBA efficient outcome equal division equilibrium binding agreements equilibrium coalition structure equilibrium payoffs example exists externalities follows grand coalition history-dependent individuals induced inefficient inequality initial integer Lemma Markovian equilibrium model of coalition Nash equilibrium negotiations noncooperative nonempty notion Observation oligopoly partition function payoff vector perpetrators positive probability possible prediction profitable move Proof of Proposition recursively reject rejector repeated games responder restriction result satisfied Section set of active Shapley value simply singleton situations solution concept stage standard equilibrium step stochastic strategic form strategy profile strictly profitable subset substructure superadditive Suppose surplus symmetric games theorem transition unique absorbing upfront transfers