Coalition Formation Under Dominance Invariance

Abstract

AbstractAn abstract game satisfies Dominance Invariance if the indirect and the direct dominance relations, or myopic and farsighted dominance, are equivalent. Mauleon et al. (Int J Game Theory 43(4):925–943, 2014) study Dominance Invariance as an attractive condition that eliminates the differences between a farsighted solution concept and its myopic counterpart. We show that Dominance Invariance can also be used to eliminate the differences between various farsighted solution concepts in any abstract game. Together with an additional condition called No Infinite Chains, Dominance Invariance implies the existence and uniqueness of the farsighted stable set, its equivalence to the largest consistent set and its equivalence to the (strong) rational expectations farsighted stable set when the latter exists. This also implies that both the farsighted stable set and the largest consistent set do not suffer from the problem of maximality under these conditions.