Local Farsightedness in Network Formation

Pierre de Callatay, Ana Mauleon and Vincent Vannetelbosch
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Pierre de Callatay: Université catholique de Louvain, LIDAM/CORE, Belgium
Vincent Vannetelbosch: Université catholique de Louvain, LIDAM/CORE, Belgium

No 2023003, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We propose the concept of local-k farsighted consistent network for analysing network formation games where players only consider a limited number of feasible networks. A network g is said to be local-k farsightedly consistent if, for any network g' within the distance-k neighbourhood of g, either g is not defeated by g' , or g defeats g' . We show that if the utility function is (componentwise) egalitarian or satisfies reversibility or excludes externalities across components, then local-k farsightedness is more likely to be a good proxy for what would happen when players have full knowledge of all feasible networks.

Keywords: Networks; local farsightedness; stability (search for similar items in EconPapers)
JEL-codes: A14 C70 D20 (search for similar items in EconPapers)
Pages: 26
Date: 2023-01-20
New Economics Papers: this item is included in nep-gth, nep-net, nep-upt and nep-ure
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Related works:
Journal Article: Local farsightedness in network formation (2024)
Working Paper: Local farsightedness in network formation (2024)
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