Probabilistic Coalition Structure Theories

Abstract

This article reports a comparative test of the central-union theory in four-person sidepayment games. Predictions by two variants of central-union theory (CU-1 and CU-2) are tested vis-à-vis predictions by three other solutions (the equal excess model, the Myerson-Shapley solution, and the kernel). With respect to players' payoffs, results show that CU-1, CU-2, equal excess, and Myerson-Shapley models have essentially equal predictive accuracy and that all of these are superior to the kernel in the test games. However, when coalition structure probability predictions are incorporated in the test, both CU-1 and CU-2 emerge as more accurate than all the other models tested.