Barberá, S.,C. Beviá, and C. Ponsatì
Games and Economic Behavior – 91 (2015), 237-257
Keywords: Egalitarianism, Meritocracy, Coalition Formation, Hedonic Games, Core Stability,
Abstract: Egalitarianism and meritocracy are competing principles to distribute the joint benefits of cooperation. We examine the consequences of letting members of society vote between those two principles, in a context where individuals must joint with others into coalitions of a certain size to become productive. Our setup induces a hedonic game of coalition formation. We study the existence of core stable partitions (organizational structures) of this game. We show that the inability of voters to commit to one distributional rule or another is a potential source of instability. But we also prove that, when stable organizational structures exist, they may be rich in form, and different than those predicted by alternative models of coalition formation. Non-segregated coalitions may arise within core stable structures. Stability is also compatible with the coexistence of meritocratic and egalitarian coalitions. These phenomena are robust, and persist under alternative variants of our initial model.