Strategy-proof coalition formation

Abstract

We analyze coalition formation problems in which a group of agents is partitioned into coalitions and agents’ preferences only depend on the coalition to which they belong. We study rules that associate to each profile of preferences a partition of the society. We focus on strategy-proof rules on restricted domains of preferences, as the domains of additively representable or separable preferences. In such domains, the only strategy-proof and individually rational rules that satisfy either a weak version of efficiency or non-bossiness and flexibility are single-lapping rules. Single-lapping rules are characterized by severe restrictions on the set of feasible coalitions that are consistent with hierarchical organizations. These restrictions are necessary and sufficient for the existence of a unique core-stable partition. In fact, single-lapping rules always select the associated unique core-stable partition. Thus, our results highlight the relation between the non-cooperative concept of strategy-proofness and the cooperative concept of uniqueness of core-stable partitions.