STABILITY AND ALLOCATION IN A THREE-PLAYER GAME

We study a three-player cooperative game with transferable utility where the players may form different coalition structures. A new concept of stability of a coalition is introduced, and the existence of a stable coalition is proven. Based on this stability concept, a novel approach is given to determine sensible allocations in a grand coalition of three players. We also compare our result with classical core solution and implement our theory on a specific price model.