A Noncooperative View of Coalition Formation and the Core

Motty Perry & Philip J. Reny

Much of the core's appeal stems from the intuitive and natural story behind it, the story that first motivated F.Y Edgeworth in 1881. Thus the primary motivation for the core is noncooperative in nature. Nonetheless, the core is not a noncooperative solution concept. This is because, in particular, the possibilities for forming coalitions, and making offers and counteroffers, are not explicitly modeled. In this work, we provide a noncooperative implementation of the core. However, we do not merely implement the core. The nature of the game form employed is designed to reflect the motivating story as accurately as possible. The present results thus provide formal content to the usual intuitive justification for the core. In our view, the core would lose much of its appeal were it not possible to provide such a noncooperative foundation.

November, 1992
Published in: 
Econometrica 62 (1994), 795-818