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This paper proposes a dynamic coalition formation algorithm for efficient sleep time allocation in a wireless sensor network (WSN) deployed to localize targets based on cooperation among the nodes. The sleep time allocation problem is formulated as a non-convex cooperative game and the concept of the core is exploited to solve this problem. In this formulation, determinant of the Cramer-Rao lower bound (CRLB) is used to evaluate the accuracy of estimations. Finally, an algorithm is proposed based on a best-reply rule which converges to the core with probability one if the core of the game is non-empty.