Coalition Formation Theory

Coalition formation theory deals with the analysis of one or more groups of agents, called coalitions, that get together to jointly determine their actions. It is related both to cooperative and non-cooperative games, as the key concept of this theory, coalition, can be defined as a group of agents which coordinates agreements among its members, while it interacts non-cooperatively with its non-members. Although a coalition, once formed, is cooperative, its creation can take place in a non-cooperative way. Essentially, one may distinguish two main aspects of coalition formation theories. One of them concerns the formation of groups, that is, the process through which a coalition comes together to coordinate its actions. Another aspect of coalition formation theories involves the enforcement of group actions as the equilibrium of an appropriate game.