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Formation of Coalition Structures as a Non-Cooperative Game

P. 188-199.

The paper proposes a list of requirements for a game able to describe individually motivated social interactions: be non-cooperative, able to construct multiple coalitions in an equilibrium and incorporate intra and inter coalition externalities. For this purpose the paper presents a family of non-cooperative games for coalition structure construction with an equilibrium existence theorem for a game in the family. Few examples illustrate the approach. One of the results is that efficiency is not equivalent to cooperation as an allocation in one coalition. Further papers will demonstrate other applications of the approach.