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Internal hierarchy and stable coalition structures

Author

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  • Morelli, Massimo
  • Park, In-Uck
Abstract
In deciding whether to join a coalition or not, an agent must consider both i) the expected power of the coalition and ii) her position in the vertical structure within the coalition. We establish the existence of a positive relationship between the degree of inequality in remuneration within coalitions and the number of coalitions to be formed endogenously in stable systems. We show that such coalitions can be mixed and balanced, rather than segregated, in terms of members' ability levels. In any stable system each coalition is of an efficient size and every agent is paid her marginal contribution.

Suggested Citation

  • Morelli, Massimo & Park, In-Uck, 2016. "Internal hierarchy and stable coalition structures," Games and Economic Behavior, Elsevier, vol. 96(C), pages 90-96.
    • Handle: RePEc:eee:gamebe:v:96:y:2016:i:c:p:90-96
    DOI: 10.1016/j.geb.2016.01.007
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    Cited by:

    1. Tobias Hiller, 2022. "Abilities and the structure of the firm," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(3), pages 339-349, September.
    2. Demange, Gabrielle, 2024. "Stable outcomes in simple cooperative games," Journal of Mathematical Economics, Elsevier, vol. 111(C).
    3. Herings, P. Jean-Jacques & Saulle, Riccardo & Seel, Christian, 2018. "The Last will be First, and the First Last: Segregation in Societies with Positional Externalities," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Hideaki Goto, 2021. "Marginal Productivity and Coalition Formation with Distributive Norms," Working Papers EMS_2021_05, Research Institute, International University of Japan.
    5. Morelli, Massimo & Park, In-Uck, 2016. "Internal hierarchy and stable coalition structures," Games and Economic Behavior, Elsevier, vol. 96(C), pages 90-96.
    6. Barberà, Salvador & Beviá, Carmen & Ponsatí, Clara, 2015. "Meritocracy, egalitarianism and the stability of majoritarian organizations," Games and Economic Behavior, Elsevier, vol. 91(C), pages 237-257.
    7. Gabrielle Demange, 2017. "The stability of group formation," Revue d'économie politique, Dalloz, vol. 127(4), pages 495-516.
    8. Herings, P. Jean-Jacques & Saulle, Riccardo & Seel, Christian, 2020. "The Last will be First, and the First Last: Segregation in Societies with Relative Payoff Concerns (RM/18/027-revised-)," Research Memorandum 011, Maastricht University, Graduate School of Business and Economics (GSBE).
    9. Tobias Hiller, 2023. "Training, Abilities and the Structure of Teams," Games, MDPI, vol. 14(3), pages 1-8, May.

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    More about this item

    Keywords

    Stable systems; Abilities; Cyclic partition; Non-segregation;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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