Paper #645

Title:

Olson vs. Coase: Coalitional worth in conflict

Authors:

Joan Esteban and József Sákovics

Date:

September 2002

Abstract:

We analyze a model of conflict with endogenous choice of effort, where subsets of the contenders may force the resolution to be sequential: First the alliance fights it out with the rest and – in case they win – later they fight it out among themselves. For three-player games, we find that it will not be in the interest of any two of them to form an alliance. We obtain this result under two different scenarios: equidistant preferences with varying relative strengths, and vicinity of preferences with equal distribution of power. We conclude that the commonly made assumption of super-additive coalitional worth is suspect.

Keywords:

Coalition formation, conflict, alliance

JEL codes:

D72, D74

Area of Research:

Microeconomics

Published in:

Theory and Decision 55, 339-357, 2004

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