Cooperative games with hedonic coalitions

Traditionally, all hedonic factors that might affect the payoffs in a cooperative game are thought to be embedded within the characteristic function. We propose to extract such factors and introduce them independently, allowing the evaluation of their separate effects. For simplicity, we consider a single hedonic attribute, and we expand the domain to include a description of this attribute. We then define a solution over the extended domain, and we discuss extensions of various standard solutions. Finally, we show that in general all relevant information in an extended environment cannot be summarized by means of a single characteristic function.Journal of Economic LiteratureClassification Number: C71.