Self-enforcing coalitions with power accumulation

Agents endowed with power compete for a divisible resource by forming coalitions with other agents. The coalition with the greatest power wins the resource and divides it among its members. The agents’ power increases according to their share of the resource.We study two models of coalition formation where winning agents accumulate power and losing agents may participate in further coalition formation processes. An axiomatic approach is provided by focusing on variations of two main axioms: self‐enforcement, which requires that no further deviation happens after a coalition has formed, and rationality, which requires that agents pick the coalition that gives them their highest payoff. For these alternative models, we determine the existence of stable coalitions that are self‐enforcing and rational for two traditional sharing rules. The models presented in this paper illustrate how power accumulation, the sharing rule, and whether losing agents participate in future coalition formation processes, shape the way coalitions will be stable throughout time.