Network formation with myopic and farsighted players

Chenghong, Luo (), Ana Mauleon and Vincent Vannetelbosch
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Chenghong, Luo: CORE, Université catholique de Louvain

No 2018025, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We study the formation of networks where myopic and farsighted individuals decide with whom they want to form a link, according to a distance-based utility function that weighs the costs and benefits of each connection. We propose the notion of myopic-farsighted stable set to determine the networks that emerge when some individuals are myopic while others are farsighted. A myopic-farsighted stable set is the set of networks satisfying internal and external stability with respect to the notion of myopic-farsighted improving path. In the case of a homogeneous population (either all myopic or all farsighted), a conflict between stability and efficiency is likely to arise. But, once the population becomes mixed, the conflict vanishes if there are enough farsighted individuals. In addition, we characterize the myopic-farsighted stable set for any utility function when all individuals are myopic.

Keywords: networks; stable sets; myopic and farsighted players; distance-based utility (search for similar items in EconPapers)
JEL-codes: A14 C70 D20 (search for similar items in EconPapers)
Date: 2018-09-05
New Economics Papers: this item is included in nep-gth, nep-mic and nep-upt
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Network formation with myopic and farsighted players (2021)
Working Paper: Network formation with myopic and farsighted players (2020)
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