Chapter 2 Coalition Formation: A Game-Theoretic Approach

Publisher Summary Game theory is nothing else than the result of rigorous mathematics applied to assumptions about the behavior of actors in situations of partial conflict. From game-theoretic models, it is possible to predict what their strategic choices will be, the ways in which they will unite into coalitions against each other, and what distributions of payoffs will occur. The aim of this chapter is to present the various game-theoretic models of coalition forming behavior as well as results from experiments to test their predictions empirically. The chapter discusses theoretical work on game theory and the major game-theoretic models of coalition forming are given. The chapter shows the ways in which game theory is applied to coalition formation by introducing the basic assumptions and concepts of this branch of applied mathematics. It also provides taxonomy of models in game theory and presents the analyses of a few games that have become popular among game theorists because they formalize known social conflicts. Special emphasis is given to the methodological status of these predictions, to the experimental methods in use, and to the trends in the outcomes of these experiments.