Abstract
In non-cooperative models of coalition formation, players have to decide whether or not to participate in a coalition (alliance). Game theoretic analyses of the formation of alliances in games with externalities, stress the difficulties in designing self-enforcing treaties because of free-riding. The presence of a strong free-rider incentive prevents most alliances of being stable and/or effective. This paper focuses on computing stability in a game on multiple coalition formation with membership rules and different transfer schemes. A new mathematical programming notation for game theory concepts is outlined. To compute stability, the new notation is used for implementation into computer coding. Implementation and computation aspects are discussed. Numerical illustration of the algorithm shows that stability varies with the applied membership rules and transfer schemes. An application of coalition formation to International Environmental Agreements (lEAs) is provided.
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Elena Sáiz was supported by the Wageningen Institute for Environment Climate Research (WIMEK)
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Sáiz, M.E., Hendrix, E.M.T. & Olieman, N.J. On the Computation of Stability in Multiple Coalition Formation Games. Comput Econ 28, 251–275 (2006). https://doi.org/10.1007/s10614-006-9047-1
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DOI: https://doi.org/10.1007/s10614-006-9047-1