Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108279 
Year of Publication: 
2012
Series/Report no.: 
IEHAS Discussion Papers No. MT-DP - 2012/26
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Centre for Economic and Regional Studies, Budapest
Abstract: 
We study coalitional games where the coalitional payoffs depend on the entire coalition structure. We introduce a noncooperative, sequential coalition formation model and show that the set of equilibrium outcomes coincides with the recursive core, a generalisation of the core to such games. In order to extend past results limited to totally recursive-balanced partition function form games we introduce subgame-consistency that requires perfectness in relevant subgames only, while some unreached subgames are ignored. Due to the externalities, the profitability of deviations depends on the partition formed by the remaining players: the stability of core payoff configurations is ensured by a combination of the pessimism of players going for certain profits only and the assumption that players base their stationary strategies on a made-up history punishing some of the possible deviators - and getting this sometimes right.
Subjects: 
partition function
externalities
implementation
recursive core
stationary perfect equilibrium
time consistent equilibrium
JEL: 
C71
C72
ISBN: 
978-615-5243-28-8
Document Type: 
Working Paper

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