Power, embedded games, and coalition formation

Applications of game theory frequently presume but do not show that social structures contain games. This study shows that multiple games are embedded in strong power structures and that power is exercised because 1) the game of those low in power contains a dilemma whereas 2) the game of those high in power does not. As in previous analyses, we find those low in power play the Prisoner's Dilemma game. New to this analysis is the discovery that those high in power play the Privileged game, a game with no dilemma. Also new is the extension of the analysis to the design of coalitions. That extension shows that, when coalition formation succeeds, it eliminates the dilemma of those low in power by transforming their game from Prisoner's Dilemma to Privileged. By contrast, exactly the same coalition structure does not alter the game played by those high in power. Applying well-known game theoretic solution concepts, we predict that low power coalitions will countervail power, but that coalitions of those high in power will not affect power exercise. Experiments testing this theory investigate 1) coalitions of those high in power, 2) low power coalitions organized against multiple high power positions, and 3) opposed coalitions struggling for power against each other. Results strongly support the theory.