The no-threat equilibrium in tournament games

Agents form coalitions with other agents. The coalition that forms with the largest power wins the tournament. A partition of the agents is a no threat equilibrium (NTE) if whenever a group of agents gains by forming their own coalition, there exist another group of agents that gains by forming their own coalition and harms at least one agent who initially deviated from the partition. We characterize the class of preferences over group of agents that guarantees the existence of a NTE partition. This class includes group of connected agents in networks without cycles, among others. ∗University of Hawaii, Department of Economics, 2424 Maile Way, Saunders Hall 542, Honolulu, HI 96822. E-mail: [email protected], Ph: (808) 956-7143. Financial Support from the AFOSR Young Investigator Program is greatly appreciated.