Partition function form games with probabilistic beliefs
For game theorists, this provides a new framework to model coalition formation under uncertainty, though the results are limited to symmetric games and specific externality types.
This paper extends cooperative game theory by introducing probabilistic beliefs about outsiders' coalition formation into partition function form games, and derives conditions on these beliefs that ensure the core is non-empty for symmetric games with positive or negative externalities.
We revisit games in partition function form, i.e. cooperative games where the payoff of a coalition depends on the partition of the entire set of players. We assume that each coalition computes its worth having probabilistic beliefs over the coalitional behavior of the outsiders, i.e., it assigns various probability distributions over the set of partitions that the outsiders can form. These beliefs are not necessarily consistent with respect to the actual choices of the outsiders. We apply this framework to symmetric partition function form games characterized by either positive or negative externalities and we derive conditions on coalitional beliefs that guarantee the non-emptiness of the core of the induced games.