On coalition formation: a game-theoretical approach

This paper deals with the question of coalition formation inn-person cooperative games. Two abstract game models of coalition formation are proposed. We then study the core and the dynamic solution of these abstract games. These models assume that there is a rule governing the allocation of payoffs to each player in each coalition structure called a payoff solution concept. The predictions of these models are characterized for the special case of games with side payments using various payoff solution concepts such as the individually rational payoffs, the core, the Shapley value and the bargaining set M₁ ⁽ⁱ⁾. Some modifications of these models are also discussed.