We develop a theory of repeated interaction for coalitional behavior. We consider stage games where both individuals and coalitions may deviate. However, coalition members cannot commit to long-run behavior (on and off the path) , and anticipate that today's actions influence tomorrow's behavior. We evaluate the degree to which history-dependence can ward off coalitional deviations. If monitoring is perfect, every feasible and strictly individually rational payoff can be supported by history-dependent conventions. By contrast, if players can make secret side-payments to each other, every coalition achieves a coalitional minmax value,  reducing the set of supportable payoffs to the core of the stage game.
We develop a theory of repeated interaction for coalitional behavior. We consider stage games where both individuals and coalitions may deviate. However, coalition members cannot commit to long-run behavior , and anticipate that today's actions influence tomorrow's behavior. We evaluate the degree to which history-dependence can deter coalitional deviations. If monitoring is perfect, every feasible and strictly individually rational payoff can be supported by history-dependent conventions. By contrast, if players can make secret side-payments to each other, every coalition achieves a coalitional minmax value, potentially reducing the set of supportable payoffs to the core of the stage game.
D
(on and off the path)
R
ward off
deter
A
potentially