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On the secession-stability of Nash equilibria in the model of endogenous coalition formation

Sergey A. Vartanov

Moscow State University

Abstract: We study a model of endogenous coalition formation by players (agents) from large societies. Each agent's preferences are described by his ideal point, while the agents are distributed on the ideal points set according to some rule. The coalition policy is determined as a median of its members ideal points distribution. The payoff of an agent depends on the distance between his ideal point and the policy of the coalition he joins and on the size of this coalition. We assume that the agents distribution has monotonous or unimodal density function. We examine the sufficient and necessary conditions for the Nash equilibria to be stable in regard to secession.

Keywords: coalition formation, Nash equilibrium, local stability.

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