Bargaining in Global Communication Networks

Marco Pelliccia

No 1507, Birkbeck Working Papers in Economics and Finance from Birkbeck, Department of Economics, Mathematics & Statistics

Abstract: We study a Rubinstein-Stahl two-player non-cooperative bargaining game played by n players connected in a communication network. We allow the players to communicate with any peer in the same component via the existing paths connecting the peers in a given communication network (global interaction). The unique stationary subgame perfect equilibrium profile characterizes the playersÂ’ expected payoff as function of their betweenness centrality score. Secondly, we study a dynamic link-formation game which allows the players to activate new linkages or sever existing ones in order to increase their bargaining power for a given marginal cost per link. We identify the conditions under which the pairwise stable network structures which arise belong to the family of the nested split graphs. These are graphs where the neighbourhood of each node is contained in the neighbourhoods of nodes with higher degrees.

Keywords: Communication; Network; Noncooperative bargaining; Network formation. (search for similar items in EconPapers)
JEL-codes: C72 C78 D85 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-mic and nep-net
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https://eprints.bbk.ac.uk/id/eprint/15272 First version, 2015 (application/pdf)

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