English

Split-Merge Dynamics for Shapley-Fair Coalition Formation

Computer Science and Game Theory 2026-03-19 v1

Abstract

Coalition formation is often modeled as a static equilibrium problem, neglecting the dynamic processes governing how agents self-organize. This paper proposes a dynamic split-and-merge framework that balances two conflicting economic forces: individual fairness and collective efficiency. We introduce a control-theoretic mechanism where topological operations are driven by distinct signals: splits are triggered by fairness violations (specifically, negative Shapley values representing "agent-responsible inefficiency"), while merges are driven by strict surplus improvements (superadditivity). We prove that these dynamics converge in finite time to a specific class of steady states termed Shapley-Fair and Merge-Stable (SFMS) partitions. Convergence is established via a vector Lyapunov function tracking aggregate fairness deficits and system surplus, leveraging a discrete-time LaSalle invariance principle. Numerical case studies on a 10-player game demonstrate the algorithm's ability to resolve fairness tensions and reach stable configurations, providing a rigorous foundation for endogenous coalition formation in dynamic environments.

Keywords

Cite

@article{arxiv.2603.17153,
  title  = {Split-Merge Dynamics for Shapley-Fair Coalition Formation},
  author = {Quanyan Zhu and Zhengye Han},
  journal= {arXiv preprint arXiv:2603.17153},
  year   = {2026}
}
R2 v1 2026-07-01T11:25:12.827Z