Local farsightedness in network formation

Pierre de Callataÿ, Ana Mauleon and Vincent Vannetelbosch

International Journal of Economic Theory, 2024, vol. 20, issue 2, 199-226

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

Date: 2024
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https://doi.org/10.1111/ijet.12396

Related works:
Working Paper: Local farsightedness in network formation (2024)
Working Paper: Local Farsightedness in Network Formation (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:20:y:2024:i:2:p:199-226

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