INSTITUTE OF MATHEMATICAL ECONOMICS

Anke Gerber

Working-Paper No. 264

December 1996

Abstract

A general NTU game is interpreted as a collection of pure bargaining games that can be played by individual coalitions. The threat points in these pure bargaining games reflect the players´ opportunities outside a given coalition. We develop a solution concept for general NTU games that is consistent in the sense that the players´ outside opportunities are determined by the solution to a suitable defined reduced game. For any general NTU game the solution predicts which coalitions are formed and how the payoffs are distributed among the players.

Keywords: Endogenous Coalition Formation, Bargaining, Outside Opportunities