Coalition Formation Processes with Belief Revision among Bounded Rational Self-Interested Agents

This paper studies coalition formation among selfinterested agents that cannot make sidepayments. We show that ff-core stability reduces to analyzing whether some utility profile is maximal for all agents. We also show that the ff-core is a subset of strong Nash equilibria. This fact carries our stability results directly over to three strategic solution concepts. The main focus of the paper is on analyzing the dynamic process of coalition formation by explicitly modeling the costs of communication and deliberation. We describe an algorithm for sequential action choice where each agent greedily maximizes its stepwise payoff given its beliefs. Conditions are derived under which this process leads to convergence of the agents' beliefs and to a stable coalition structure (when the length of the process is exogenously restricted as well as when agents can choose it). Finally, we show that the outcome of any communication-deliberation process that leads to a stable coalition structure is Pa..