A Noncooperative Model of Contest Network Formation

Kenan Huremović

No 1521, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: Network structure has a significant role in determining the outcomes of many socio-economic relationships, including antagonistic ones. In this paper we study a situation in which agents, embedded in a network, simultaneously play interrelated bilateral contest games with their neighbours. Spillovers between contests induce complex local and global network effects. We first characterize the equilibrium of the game on an arbitrary fixed network. Then we study a network formation model, introducing a novel but intuitive link formation protocol. As links represent negative relationships, link formation is unilateral while link destruction is a bilateral action. The unique stable network topology is the complete k-partite network with partitions of different sizes. This model also provides a micro-foundation for the concept of structural balance, and the main results go in line with theoretical and empirical findings from other disciplines, including biology and sociology.

Keywords: network formation; game on network; contest; structural balance (search for similar items in EconPapers)
JEL-codes: D74 D85 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2015-02, Revised 2015-02
New Economics Papers: this item is included in nep-gth and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: A noncooperative model of contest network formation (2021)
Working Paper: A Noncooperative Model of Contest Network Formation (2020)
Working Paper: A Noncooperative Model of Contest Network Formation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1521

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