This paper studies coalition formation among selfinterested agents that cannot make sidepayments. We show that -core stability reduces to analyzing whether some utility pro le is maximal for all agents. We also show that the -core is a subset of strong Nash equilibria. This fact carries our stability results directly over to three strategic solution concepts. The main focus of the paper is on analyzing the dynamic process of coalition formation by explicitly modeling the costs of communication and deliberation. We describe an algorithm for sequential action choice where each agent greedily maximizes its stepwise payo given its beliefs. Conditions are derived under which this process leads to convergence of the agents' beliefs and to a stable coalition structure (when the length of the process is exogenously restricted as well as when agents can choose it). Finally, we show that the outcome of any communication-deliberation process that leads to a stable coalition structure is Pareto-optimal for the original game that does not incorporate communication or deliberation. Conversely, any Pareto-optimal outcome can be supported by a communication-deliberation process that leads to a stable coalition structure.
REF studies coalition formation among self-interested agents that cannot make sidepayments-reward each other with payments for agreement to join some coalition, making the evaluation of a coalition solely on its utility.
Coalition Formation Processes with Belief Revision among Bounded-rational Self-interested Agents
J. Log. Comput.
Mathematics Computer Science