Virtualization of resources on the cloud offers a scalable means of
consuming services beyond the capabilities of small systems. In a
cloud that offers infrastructure like CPU, memory, hard-disk, etc., a
coalition of virtual machines formed by grouping two or more may be
needed. Economical management of cloud resources needs allocation
strategies with minimum wastage, while configuring services ahead of
actual requests. We propose a resource allocation mechanism for
machines on the cloud, based on the principles of coalition formation
and the uncertainty principle of game theory. We compare the results
of applying this mechanism with existing resource allocation methods
that have been deployed on the cloud. We also show that this method
of resource allocation by coalition formation of the machines on the
cloud leads not only to better resource utilization but also higher
request satisfaction.