Stable Coalition Research Articles

Core stable coalition selection in collaborative truckload transportation procurement

We study the problem of forming a core stable coalition that minimizes system-wide cost, given a set of candidate full truckload shipment lanes, which we model as players, and a characteristic function that corresponds to solving an NP-Hard cost minimizing lane covering problem. Since not every coalition has a non-empty core in this setting, we formulate a mixed integer linear program that can identify a core stable coalition with minimal system-wide cost along with a cost allocation in the core. We propose a solution method that embeds row generation, column generation, and an upper bounding heuristic into branch-and-bound, which can be considered as a form of branch-and-cut-and-price. We evaluate the performance of our solution method through extensive numerical experiments on randomly generated problem instances.

Optimal reinsurance with multiple reinsurers: Competitive pricing and coalition stability

This paper studies economic pricing of reinsurance contracts via competition of an insurer with multiple reinsurers. All firms are assumed to be endowed with distortion risk measures or expected exponential utilities. Reinsurance contracts are required to be Pareto optimal, individually rational, and satisfy a competition constraint that we call coalition stability. As shown in the literature, it holds that Pareto optimality is equivalent to a structure on the indemnities. This paper characterizes the corresponding premiums by a competition argument. The competition among reinsurers imposes constraints on the premiums that the reinsurers are able to charge and this may lead to a strictly positive profit for the insurer. When the firms use distortion risk measures, this constraint yields stability for subcoalitions, which is a condition akin to the core in cooperative game theory. The premiums and the profit of the insurer are derived in closed-form. This paper illustrates this premium function with the Mean Conditional Value-at-Risk and the GlueVaR. If the firms use expected exponential utilities, the premium is represented by an exponential premium.

Patent auctions and bidding coalitions: structuring the sale of club goods

AbstractAuctioneers of patents are observed to allow joint bidding by coalitions of buyers. These auctions are distinguished by the good for sale being nonrivalrous, but still excludable, in consumption—that is, they auctions of club goods. This affects how coalitional bidding impacts auction performance. We study the implications of coalitions of bidders on second‐price (or equivalently, ascending‐price) auctions. Although the formation of coalitions can benefit the seller, we show that stable coalition profiles tend to consist of excessively large coalitions, to the detriment of both auction revenue and social welfare. Limiting the permitted coalition size increases efficiency and confers benefits on the seller. Lastly, we compare the revenues generated by patent auctions and multilicense auctions, and we find that the latter are superior in a large class of environments.

Formation, Size, and Stability of Coalitions within Organizations

This paper investigates the link between coalitions, i.e. informal organizational structures, and individual learning in organizations. Building on the canonical Garbage Can Model (Cohen et al., 1972), we develop an agent-based model that allows us to analyze how organizational members’ learning about others’ preferences enables the emergence of coalitions. Altering the concentration (extremeness) of individuals’ preferences, we find differences in the precision of learning. We observe how large and stable coalitions get as a result of this learning process and how the presence of this informal structure can benefit the overall organization. Subsequently, we find that the organizational benefit of coalitions is greatest for low concentration setups. In exploiting this interplay, this paper also takes a first stab at integrating two hitherto disjointed lines of thinking on learning and bargaining.

Equilibrium analysis and coalition stability in R&D cooperation with spillovers

This article analyzes cost-reducing R&D cooperation by n horizontal firms, and studies two common cooperation modes with knowledge spillovers: R&D cartels (CT) and research joint ventures (RV). These firms are allowed to freely form coalitions (or alliances) among themselves to better coordinate their R&D efforts, and then compete in the production stage. We model the endogenous alliance/coalition formation between n firms given coalition structures as a two-stage game, in which the firms in the first stage choose to cooperate in R&D, and in the second stage all firms play a Cournot game in production quantity. Our results show that the coalition structure’s stability is closely affected by spillover rate and degree of R&D difficulty, number of participant firms, cooperation modes, and myopic and farsighted views. We find that the grand coalition is not always myopic stable and is farsighted stable under the CT mode with a three-firm or four-firm market, while the grand coalition is always not myopic stable but is farsighted stable under the RV mode only with a four-firm market. Moreover, we find that the conditions under which there are no myopic stable coalition structures for the RV and CT modes with regard to spillover rate and degree of R&D difficulty differ.

International cooperation on financial market regulation

At the latest the global financial crisis has raised the awareness of the need for a globally coordinated financial market regulation. Even though the necessity to cooperate is widely acknowledged, cooperation is often limited in practice. This article characterizes the formation of self-enforcing international financial regulation agreements. Our analysis allows to evaluate the desirability and feasibility of cooperative solutions and explains the challenges associated with the process of cooperation. We model the cooperation of national financial regulators in a game-theoretical framework that considers financial stability to be an impure public good. Joint national supervisory effort is supposed to increase aggregate welfare in terms of a more stable financial system both on a global and on a local level by simultaneously generating incentives to free-ride. Our analysis in general indicates the difficulty of reaching a fully cooperative solution. In our basic version of the model we show that partial cooperation of two or three countries is stable and improves the welfare of all countries relative to the non-cooperative Nash equilibrium. Further analyses highlight the role of additional club benefits. When signatory countries of a coalition gain benefits over and above the joint welfare maximization, stable coalitions of any size become feasible.

Trade sanctions and the stability of climate coalitions

We investigate whether trade sanctions against outsiders can foster climate cooperation in self-enforcing international environmental agreements if outsiders retaliate. We find a threshold effect: In small coalitions incentives to be a coalition member decrease whereas in large coalitions they increase. Thus, trade sanctions can be an effective tool in climate policy only after a sufficiently large climate coalition has already been formed. Even if larger stable coalitions are achieved with trade sanctions, implications for global welfare can be adverse, because additional trade distortions trade off with the environmental gains. We identify the USA and Europe as essential members of stable coalitions if outsiders retaliate.

A Cul-de-Sac or a Blazing Trail? The Significance and Long-Term Impact of the Numerus Clausus Legislation

ABSTRACT This essay discusses the origins and the short- and long-term consequences of Hungary’s numerus clausus legislation of 1920. The legislation enjoyed widespread support in the non-Jewish middle class and played an important role in the rise of a stable social coalition, which provided the backbone of popular support for the Horthy regime in the interwar period.

Making and breaking coalitions: Strategic sophistication and prosociality in majority decisions

From a traditional rational choice perspective, coalitions are inherently unstable if collective decisions involve distributional conflicts. Empirically, however, many coalitions and distribution decisions seem rather stable. While traditional explanations for the empirical stability of coalitions refer to institutions, more recent theoretical developments argue that behavioral traits like actors’ strategic sophistication and prosociality have stabilizing effects. In this study, we provide a first empirical test of this theoretical claim. In a laboratory experiment, we measure subjects’ strategic abilities and their revealed social preferences. Then subjects are matched into three-person groups and play a real-time coalition formation game. Our data show that strategic subjects form more stable coalitions than myopic subjects. Prosocial subjects are more likely to agree on even allocations, and those allocations are more likely to last. Our results indicate that kind and strategically sophisticated people do not need institutions to reach stable coalitions that distribute resources evenly.

Testing stability prop\ufefferties in graphical hedonic games

In hedonic games, players form coalitions based on individual preferences over the group of players they could belong to. Several concepts to describe the stability of coalition structures in a game have been proposed and analysed in the literature. However, prior research focuses on algorithms with time complexity that is at least linear in the input size. In the light of very large games that arise from, e.g., social networks and advertising, we initiate the study of sublinear time property testing algorithms for existence and verification problems under several notions of coalition stability in a model of hedonic games represented by graphs with bounded degree. In graph property testing, one shall decide whether a given input has a property (e.g., a game admits a stable coalition structure) or is far from it, i.e., one has to modify at least an epsilon-fraction of the input (e.g., the game’s preferences) to make it have the property. In particular, we consider verification of perfection, individual rationality, Nash stability, (contractual) individual stability, and core stability. While there is always a Nash-stable coalition structure (which also implies individually stable coalitions), we show that the existence of a perfect coalition structure is not tautological but can be tested. All our testers have one-sided error and time complexity that is independent of the input size.

Rewards and penalties in an evolutionary game theoretic model of international environmental agreements

The UNFCC on climate change specifies that all nations must follow the rule of ‘common’ with differentiation regarding their responsibilities for the protection of the global environmental system. Recently, the formulation and stability of the IEA have been increased in the literature by applying the concept of game theory to make the climate agreements successful at the national and the international level. This study provides a novel evolutionary game theoretic model of self-enforcing IEA to overcome the free rider problem. The fundamental difference between our paper and existing literature is that we examine enforcement within a model as IEA has a governing authority while the typical model of enforcement involves a government enforcing a rule that it has imposed. For this purpose, we assign countries into different grades according to their pollution levels, consider a combination of rewards and penalties, use replicator dynamics to derive the conditions for the population steady state, and examine how the proposed regulatory mechanism fares in this steady state. This framework enables us to avoid the free rider and renegotiation problems as well as the rationality assumption. We establish the condition for evolutionary stability. The global environmental problem is managed effectively as a reward-punishment scheme and the monitoring frequency of IEA fulfills this condition. Our results provide an allocation principal with stable conditions under which countries get more benefits by monitoring the IEA and stability of the grand coalition holds.

Reaching Individually Stable Coalition Structures in Hedonic Games

The formal study of coalition formation in multiagent systems is typically realized using so-called hedonic games, which originate from economic theory. The main focus of this branch of research has been on the existence and the computational complexity of deciding the existence of coalition structures that satisfy various stability criteria. The actual process of forming coalitions based on individual behavior has received little attention. In this paper, we study the convergence of simple dynamics leading to stable partitions in a variety of classes of hedonic games, including anonymous, dichotomous, fractional, and hedonic diversity games. The dynamics we consider is based on individual stability: an agent will join another coalition if she is better off and no member of the welcoming coalition is worse off. We identify conditions for convergence, provide elaborate counterexamples of existence of individually stable partitions, and study the computational complexity of problems related to the coalition formation dynamics. In particular, we settle open problems suggested by Bogomolnaia and Jackson (2002), Brandl, Brandt, and Strobel (2015), and Boehmer and Elkind (2020).

The efficacy of international environmental agreements when adaptation matters: Nash-Cournot vs Stackelberg leadership

We analyze the paradox of cooperation, as established by Barrett (1994), and later reiterated by many others, in a more general framework. That is, we show that stable coalitions are either small or if they are large, the potential gains from cooperation are small. First, we argue that the extension to a mitigation-adaptation game is a generalization of Barrett's pure mitigation game. Second, we consider for this extension not only the Nash-Cournot scenario, as in Bayramoglu et al. (2018), but also the Stackelberg scenario. Third, we show generally that if mitigation levels in different countries are strategic substitutes, stable coalitions are larger in the Stackelberg than in the Nash-Cournot scenario. Fourth, this is reversed if mitigation levels are strategic complements, which is possible if the strategic interaction between mitigation and adaptation is sufficiently strong. Fifth, for all possible combination of assumptions, we demonstrate that the paradox of cooperation is robust, except if mitigation and adaptation were strategic complements, which we argue is an assumption not supported by empirical evidence.

A market-based approach for enabling inter-area reserve exchange

Considering the sequential clearing of energy and reserves in Europe, enabling inter-area reserve exchange requires optimally allocating inter-area transmission capacities between these two markets. To achieve this, we provide a market-based allocation framework and derive payments with desirable properties. The proposed min-max least core selecting payments achieve individual rationality, budget balance, and approximate incentive compatibility and coalitional stability. The results extend the works on private discrete items to a network of continuous public choices.

Peer to peer transactive energy for multiple energy hub with the penetration of high-level renewable energy

Energy hub (EH) has attracted worldwide appeals and shows broad prospects in promoting high-level renewable energy integration as well as supplying various loads with high flexibility. Although the cooperation of multiple EHs will further improve the flexibility and economy, how to allocate the payoff fairly and convincingly remains challenged. To address the above challenge, this paper provides a market mechanism based on EH’s peer-to-peer (P2P) transaction for the operation of multiple EHs. The cooperative game theory is applied to develop a fair and convincing payoff allocation scheme. This paper further proves that the cooperative game of multiple EH operations is a balanced game, demonstrating EHs’ grand coalition's stability. The payoff allocation problem is formulated as a two-stage problem. In the first stage, payoff allocation is determined to minimize the worst-case excess. In the second stage, the coalition with the highest excess is found and returned to the first-stage problem. To solve the two-stage problem, the solution technique utilizing column constraints generation is provided. Numerical results for two test systems show the effectiveness, computation performance, and scalability of the proposed method. In the test system, each EH has its payoff increased, ranging from 4% to 19%. The proposed solution technique avoids the computational burden growing exponentially and computes 4168 s when the number of possible coalitions is up to 4.29e9.

Cooperative Management of Ecosystem Services: Coalition Formation, Landscape Structure and Policies

A growing body of literature shows that full-cooperation among farmers to manage productive ecosystem services would yield gains with respect to uncoordinated approaches. The public good feature of these ecosystem services may, however, hinder the emergence of a cooperative solution at the landscape scale. In this paper, we introduce in a coalition formation game a spatially-explicit bioeconomic model of fruit pollination, where pollinaton depends on the distance to the choosen location of natural habitats. We analyse: (i) which coalitions are stable; (ii) what benefits they provide; (iii) how cooperation depends on the initial landscape structure; and (iv) how policy instruments affect cooperation. The theoretical model presents the rationality of cooperation but, due to the detailed heterogeneity and complex spatial interactions among farms, we use a numerical example to determine the stable coalitions. We find that only small coalitions are stable and that the benefits of cooperation decrease when the spatial autocorrelation of fruit tree covers increase. Policy instruments can increase the interest for cooperation but per-hectare payments and minimum participation rules may reduce the habitat area at the margin (by decreasing the stability of coalitions). Price premium for the coalition members increase the habitat area but its budget-effectiveness decreases as the spatial autocorrelation of fruit tree covers increase.

Content-Aware Multi-Subtask Offloading: A Coalition Formation Game-Theoretic Approach

In existing work focusing on task offloading, the internal relationship between the offloaded task and its content is ignored but significant. Each subtask which is divided according to the type of application and content, obtains a corresponding delay requirement decided by the unique content characteristics of subtasks. Due to the limited computing capacity of mobile devices, it causes different delay of each subtask. In this letter, we first study a content-aware multi-subtask offloading problem based on the individual characteristics of each subtask. Under the different delay requirements of subtasks, the goal is to minimize the aggregate energy consumption by optimizing the offloading decision and channel allocation. The problem is formulated as a coalition-based subtask cooperation offloading game, which is proved with a stable coalition structure under our proposed cooperation order. Then, the content-aware task offloading (CATO) algorithm is proposed to obtain a stable coalition partition. Finally, simulations demonstrate the validity and effectiveness of the coalition-based subtask cooperation offloading game as well as the CATO algorithm.

Die Parlamentarismusdebatte in der Weimarer Republik [The debate on parliamentarism in the Weimar Republic

ABSTRACT From the outset of the Weimar Republic on 9 November 1918, the organization of a parliamentary democracy after the First World War and the repartition of powers between the German Parliament and the German State President aroused a lively debate about parliamentarism. The first phase of the debate was dominated by constitutional advocates who defended the form of parliamentarism created by the Weimar Constitution. In the course of time, criticism became more systematic and this was enhanced by the permanent condition of political instability, due to the inability to form stable coalitions and lasting governments. The advocates of parliamentary democracy were progressively forced onto the defensive and at the same time, they became aware of the existing difficulties of the political situation. This article therefore examines the key issues and reform proposals that characterized these constitutional debates in the Weimar Republic.

Fair shares? Advancing land economics through cooperative game theory

Site consolidation is a perennial issue in the study of land economics. The emergence in many contexts of policies that follow variations on ‘land readjustment’ represent a common way for policy makers to overcome the barriers to wholesale redevelopment. In several important respects the nature of the problems that land readjustment seeks to confront are best thought of as questions in cooperative game theory. In this contribution we seek to explore the underpinning logic of land-readjustment using fundamental concepts in cooperative game theory: the Shapley value and the Core. In addition, we present results of an experiment on coalition and value distribution in four European countries. Our results shed light on a range of important practical issues for the policy ranging from the conditions under which development might be self-initiated to coalition stability, and to the value of an animating agency such as urban planning.

Anchored Team Formation Games

We propose Anchored Team Formation Games (ATFGs), a new class of hedonic game inspired by tabletop role playing games.We establish the NP-hardness of determining whether Nash stable coalition structures exist, and provide results for three heuristics for this problem. We highlight costs and benefits of each heuristic and provide evidence that all three are capable of finding Nash stable coalition structures, when they exist, much more quickly than a deterministic algorithm.