Coalition formation among farsighted agents (Q2344941)

Summary: A set of coalition structures \(P\) is farsightedly stable (i) if all possible deviations from any coalition structure p belonging to \(P\) to a coalition structure outside \(P\) are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsighted improvingpath from any coalition structure outside the set leading to some coalition structure in the set, and (iii) if there is no proper subset of \(P\) satisfying the first two conditions. A non-empty farsightedly stable set always exists. We provide a characterization of unique farsightedly stable sets of coalition structures and we study the relationship between farsighted stability and other concepts such as the largest consistent set and the von Neumann-Morgenstern farsightedly stable set. Finally, we illustrate our results by means of coalition formation games with positive spillovers.