Game Theory

Coalition Formation Processes in Real Time

In this paper we develop the stable set defined on dynamic paths as a solution concept for coalition formation processes in real time. Our model accommodates myopia and sophisticated farsightedness. For the case where only a singleton moves at each node, our solution coincides with the set of subgame perfect paths.

Keywords: Coalition Formation, Farsightedness, Dynamic Equilibrium; JEL classifications: C71 PDFile

A Median Voter Theorem for Proportional Representation Systems with Firm Preelectoral Coalitions

We define the stable set of a party formation game with farsighted citizen candidates under proportional representation. Voters are sincere, parties are identified with candidate positions and can enter firm preelectoral coalitions. A coalition government is associated with a lottery over the ideal positions of its constituent parties. If preferences are strictly concave, in every outcome in the unique farsighted stable set the candidate representing the median voter wins the election as a singleton.

Keywords: Median Voter, Proportional Representation, Endogenous Political Parties, Farsighted Stable Set; JEL classifications: C72, D72 PDFile

Cycles and Optimistic Stability in Graphs: The Role of Competition, Veto Players and Moderators, Studies in Microeconomics 5(1), 2017: 113.

This paper provides sufficient conditions for a non empty optimistic stable standard of behaviour (OSSB) to exist in directed graphs. Graphs which are completely con- nected by single player arcs for each player always admit a (non unique) OSSB. A loop can be broken by adding single player moves to some default position. If there are nodes with a decision cycle over the move to the successor node, introducing veto players ensures that an OSSB exists which assigns a non empty solution to every vertex along the equilibrium path.

Keywords: Perfect foresight, intransitive choice, cyclicity in graphs, coalitions, theory of social situations, veto player; JEL codes: C70, C71, C72. Working Paper Journal LINK

Secession and Value, in: Economics Letters 92, 2006: 306-310

A model with random proposals, where secession of coalitions is the only threat, yields exploitative allocations. If proposals for coalition S involve randomization, the responders' pay off vector consists of Shapley values for coalition sizes ranging from 1 to |S|-1.

Keywords: Shapley Value, Bargaining; JEL classifications: C71, C78, H11, PDFile LINK

04.04.2007; (C) 2000 by Gerald Pech