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Coalitional negotiation

Author

Listed:
  • MAULEON, Ana

    (Department of Economic Analysis, Basque Country University)

  • VANNETELBOSCH, Vincent

    (Institute of Public Economics, Basque Country University)

Abstract

We develop a two-stage negotiation model to study the impact of costly inspections on both the coalition formation outcome and the per-member payoffs. In the first stage, the players are forming coalitions and inside each coalition formed the members share the coalition benefits. We adopt the largest consistent set (LCS) to predict which coalition structures are possibly stable. We also introduce a refinement,the largest cautious consistent set (LCCS). In the second stage, the inspection game takes place inside each coalition. For games with positive spillovers, many coalition structures may belong to the LCS under costless inspection. The grand coalition, which is the efficient coalition structure, always belongs to the LCS and is the unique one to belong to the LCCS. Under costly inspection, the grand coalition does not always belong to the LCS. Nevertheless, there exists inspection cost parameters such that the LCS singles out the grand coalition.

Suggested Citation

  • MAULEON, Ana & VANNETELBOSCH, Vincent, 1999. "Coalitional negotiation," LIDAM Discussion Papers CORE 1999020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1999020
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    References listed on IDEAS

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    Cited by:

    1. A. Mauleon & V. Vannetelbosch, 2000. "Coalitional Negotiation with Monitoring," THEMA Working Papers 2000-35, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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    More about this item

    Keywords

    coalition formation; inspections; positive spillovers; largest consistent set.;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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