Allocating value among farsighted players in network formation

Nicolas Carayol, Remi Delille and Vincent Vannetelbosch

Cahiers du GREThA (2007-2019) from Groupe de Recherche en Economie Théorique et Appliquée (GREThA)

Abstract: We propose a concept to study the stability of social and economic networks when players are farsighted and allocations are determined endogenously. A set of networks is a von Neumann-Morgenstern farsightedly stable set with bargaining if there exists an allocation rule and a bargaining threat such that (i) there is no farsighted improving path from one network inside the set to another network inside the set, (ii) from any network outside the set there is a farsighted improving path to some network inside the set, (iii) the value of each network is allocated among players so that players suffer or benefit equally from being linked to each other compared to the allocation they would obtain at their respective credible bargaining threat. We show that the set of strongly efficient networks is the unique von Neumann-Morgenstern farsightedly stable set with bargaining if the allocation rule is anonymous and component efficient and the value function is top convex. Moreover, the componentwise egalitarian allocation rule emerges endogenously.

Keywords: Farsighted players; Stability; Equal bargaining power (search for similar items in EconPapers)
JEL-codes: A14 C70 D20 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-mic, nep-net and nep-sog
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Related works:
Journal Article: Allocating value among farsighted players in network formation (2015)
Working Paper: Allocating value among farsighted players in network formation (2015)
Working Paper: Allocating value among farsighted players in network formation (2015)
Working Paper: Allocating value among farsighted players in network formation (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:grt:wpegrt:2014-05

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