Ruhr Economic Papers

Ruhr Economic Papers #236

Outside Options in Probabilistic Coalition Situations

by Julia Belau

TU Dortmund, RGS Econ, 01/2011, 28 S./p., 8 Euro, ISBN 978-3-86788-270-5



In this paper, I introduce an extension of (TU) games with a coalition structure. Taking a situation where all coalitions are already established is not reasonable in order to forecast the reality; there is not only one possible coalition, there are several. I consider situations where coalitions are not established yet and take into account the likelihood of each possible coalition. This leads to a generalized, probabilistic setting for coalition structures. Probabilistic versions of known axioms are introduced as well as new probabilistic axioms. Generalizations of both the outside-option-sensitive chi-value (Casajus, Soc Choice Welf 32, 1-13, 2009) and its outside-option-insensitive pendant, the component restricted Shapley value (Aumann and Drèze, Int. J. Game Theory 3, 217-237, 1974), are defined and axiomatic characterizations are given.

JEL-Classification: C71

Keywords: TU game; coalition structure; outside option