Coalition Formation Processes with Belief Revision among Bounded-rational Self-interested Agents

This paper studies coalition formation among self-interested 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 strategy pro les that lead to the -core are a subset of Strong Nash equilibria. This fact carries our -core-based stability results directly over to two other strategic solution concepts: Nash equilibrium and Coalition-Proof Nash equilibrium. This material is based upon work supported by the National Science Foundation under Tuomas Sandholm's CAREER Award IRI-9703122, Grant IRI-9610122, and Grant IIS9800994. Fernando Tohm e was also supported by the Departamento de Econom a of the Universidad Nacional del Sur, in Argentina and by a Fellowship from the National Research Council (CONICET) of Argentina. An early version of this paper appeared in a workshop [41]

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