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Internal Hierarchy and Stable Coalition Structures

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  • Massimo Morelli
  • In-Uck Park

Abstract

When an agent decides whether to join a coalition or not, she must consider both i) the expected strength of the coalition and ii) her position in the vertical structure within the coalition. We establish that there exists a positive relationship between the degree of inequality in remuneration across ranks within coalitions and the number of coalitions to be formed. When coalition size is unrestricted, in all stable systems the endogenous coalitions must be mixed and balanced in terms of members' abilities, with no segregation. When coalitions must have a fixed finite size, stable systems display segregation by clusters while maintaining the aforesaid feature within clusters.

Suggested Citation

  • Massimo Morelli & In-Uck Park, 2011. "Internal Hierarchy and Stable Coalition Structures," Economics Working Papers ECO2011/20, European University Institute.
    • Handle: RePEc:eui:euiwps:eco2011/20
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    References listed on IDEAS

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    Cited by:

    1. Tobias Hiller, 2022. "Abilities and the structure of the firm," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(3), pages 339-349, September.
    2. Demange, Gabrielle, 2024. "Stable outcomes in simple cooperative games," Journal of Mathematical Economics, Elsevier, vol. 111(C).
    3. Herings, P. Jean-Jacques & Saulle, Riccardo & Seel, Christian, 2018. "The Last will be First, and the First Last: Segregation in Societies with Positional Externalities," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Hideaki Goto, 2021. "Marginal Productivity and Coalition Formation with Distributive Norms," Working Papers EMS_2021_05, Research Institute, International University of Japan.
    5. Morelli, Massimo & Park, In-Uck, 2016. "Internal hierarchy and stable coalition structures," Games and Economic Behavior, Elsevier, vol. 96(C), pages 90-96.
    6. Barberà, Salvador & Beviá, Carmen & Ponsatí, Clara, 2015. "Meritocracy, egalitarianism and the stability of majoritarian organizations," Games and Economic Behavior, Elsevier, vol. 91(C), pages 237-257.
    7. Gabrielle Demange, 2017. "The stability of group formation," Revue d'économie politique, Dalloz, vol. 127(4), pages 495-516.
    8. Herings, P. Jean-Jacques & Saulle, Riccardo & Seel, Christian, 2020. "The Last will be First, and the First Last: Segregation in Societies with Relative Payoff Concerns (RM/18/027-revised-)," Research Memorandum 011, Maastricht University, Graduate School of Business and Economics (GSBE).
    9. Tobias Hiller, 2023. "Training, Abilities and the Structure of Teams," Games, MDPI, vol. 14(3), pages 1-8, May.

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    More about this item

    Keywords

    Stable Systems; Abilities; Hierarchy; Cyclic Partition;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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