A Bargaining Theory of Coalition Formation

Abstract

Central both to formal theories of coalition formation and many, actual, collective decision-making processes is the distribution of some reward, or payoff as it is commonly called, among those participants able to control a decision. The payoff constitutes an object of value for the players, or the stakes of the game, the disposition of which becomes a primary focus of bargaining among them. It is usual to assume that participants in coalition-forming contexts are rational actors, and this is often interpreted to mean that they pursue strategies intended to maximize their individual shares of the available payoff. Theories based upon this general structure have furnished a variety of important propositions, focusing mostly upon the composition of winning coalitions.