Coalition formation games with separable preferences. (Q1810716)

The authors study a {hedonic coalition formation game} represented by a pair \(\Gamma = \langle N, \{\succeq_i~\}_{i=1}^n\rangle\), where \(N=\{1,2,\ldots,n\}\) is a finite set of agents and and for each \(i\in N\), \(\succeq_i\) is a reflexive, complete and transitive preference ordering over all the subsets of \(N\) containing player \(i\). The basic problem in the paper is to look for a ``stable'' solution of \(\Gamma\), in the form of a partition \(\pi\) of the agents set \(N\) into disjoint nonempty coalitions \(C_h\) represented by \(\pi = \{C_h\}_{h=1}^H\). It is assumed that agents' preferences determine their preferences over partitions of \(N\) in the following way: for each \(i\), \(\pi \succeq_i \pi' \Leftrightarrow C_{\pi}(i) \succeq_i C_{\pi'}(i)\), where \(C_{\pi}(i)\) donotes the coalition in \(\pi\) to which agent \(i\) belongs. Two solutions concepts arising from core stability and Nash stability are considered, according to the two definitions: (1) A partition \(\pi\) is core stable if there is no nonempty \(C\subseteq N\) for which \(C \succ_i C_{\pi}(i)\) for \(i\in N\); and (2) A partition \(\pi\) is {Nash stable} if for all \(i\in N\) and for all \(C_h \in \pi \cup \{\emptyset\}\), \(C_{\pi}(i) \succeq_i C_h\cup \{i\}\). Several various properties of agents' preferences are considered to define the basic wide class of preferences, called {descending separable} preferences. The main result of the paper says that if preferences are descending separable in the game \(\Gamma\), then there is a partition \(\pi\) that is both core and Nash stable. Also an interesting example of a game without a core stable partition is given.