IDEAS home Printed from https://ideas.repec.org/p/wrk/wcreta/63.html
   My bibliography  Save this paper

Cooperation in a State of Anarchy

Author

Listed:
  • Muthoo, Abhinay

    (University of Warwick)

Abstract

We lay down a simple (game-theoretic) model of a state-of-anarchy involving three players. We focus attention on the following question : Which subset of players (if any) will agree to cooperate amongst each other? Will all three players agree to do so, or only two of the three players (and if so, which two players)? Or will no player agree to cooperate with any other player? We show that the socially optimal outcome is for all three players to agree to cooperate with each other. We also show that due to the presence of positive externalities, in equilibrium, cooperation may only be established between two of the three players (which is sub-optimal). JEL codes: D62 ; D74 ; F02

Suggested Citation

  • Muthoo, Abhinay, 2020. "Cooperation in a State of Anarchy," CRETA Online Discussion Paper Series 63, Centre for Research in Economic Theory and its Applications CRETA.
    • Handle: RePEc:wrk:wcreta:63
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/creta/papers/manage/creta63_-_abhinay_muthoo.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bloch, Francis, 1996. "Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division," Games and Economic Behavior, Elsevier, vol. 14(1), pages 90-123, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stefan Ambec & Yann Kervinio, 2016. "Cooperative decision-making for the provision of a locally undesirable facility," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(1), pages 119-155, January.
    2. Hans‐Peter Weikard, 2009. "Cartel Stability Under An Optimal Sharing Rule," Manchester School, University of Manchester, vol. 77(5), pages 575-593, September.
    3. Jérôme Dollinger & Ana Mauleon & Vincent Vannetelbosch, 2024. "R &d and market sharing agreements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 78(3), pages 877-922, November.
    4. Olivier Compte & Philippe Jehiel, 2010. "The Coalitional Nash Bargaining Solution," Econometrica, Econometric Society, vol. 78(5), pages 1593-1623, September.
    5. Horn, Henrik & Persson, Lars, 2001. "Endogenous mergers in concentrated markets," International Journal of Industrial Organization, Elsevier, vol. 19(8), pages 1213-1244, September.
    6. Stefan Ambec, 2020. "Environmental markets exacerbate inequalities," Working Papers hal-02945513, HAL.
    7. Konishi, Hideo & Pan, Chen-Yu, 2021. "Endogenous alliances in survival contests," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 337-358.
    8. Santiago Sánchez-Pagés, 2007. "Endogenous coalition formation in contests," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 139-163, September.
    9. Thoron, Sylvie & Sol, Emmanuel & Willinger, Marc, 2009. "Do binding agreements solve the social dilemma?," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1271-1282, December.
    10. Imamura, Kenzo & Konishi, Hideo & Pan, Chen-Yu, 2023. "Stability in matching with externalities: Pairs competition and oligopolistic joint ventures," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 270-286.
    11. Doyen, Luc & Péreau, Jean-Christophe, 2012. "Sustainable coalitions in the commons," Mathematical Social Sciences, Elsevier, vol. 63(1), pages 57-64.
    12. Bich, Philippe & Teteryatnikova, Mariya, 2023. "On perfect pairwise stable networks," Journal of Economic Theory, Elsevier, vol. 207(C).
    13. Annelies De Ridder & Agnieszka Rusinowska, 2008. "On Some Procedures of Forming a Multipartner Alliance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 443-487, June.
    14. Ahmed Mahmud, 2011. "The creation of multi-ethnic nations with or without a core region," Public Choice, Springer, vol. 147(3), pages 359-376, June.
    15. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, May.
    16. Britz, Volker & Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2014. "On the convergence to the Nash bargaining solution for action-dependent bargaining protocols," Games and Economic Behavior, Elsevier, vol. 86(C), pages 178-183.
    17. Kóczy, LászlóÁ., 2015. "Stationary consistent equilibrium coalition structures constitute the recursive core," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 104-110.
    18. Thijssen, J.J.J., 2003. "Investment under uncertainty, market evolution and coalition spillovers in a game theoretic perspective," Other publications TiSEM 672073a6-492e-4621-8d4a-0, Tilburg University, School of Economics and Management.
    19. Sareh Vosooghi, 2017. "Information Design In Coalition Formation Games," Working Papers 2017.28, Fondazione Eni Enrico Mattei.
    20. Ray, Debraj & Vohra, Rajiv, 2015. "Coalition Formation," Handbook of Game Theory with Economic Applications,, Elsevier.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F02 - International Economics - - General - - - International Economic Order and Integration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:wcreta:63. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Margaret Nash (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.