Local farsightedness in network formation

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

No 3285, LIDAM Reprints 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 analyzing 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 neighborhood 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: Local farsightedness; networks; stability (search for similar items in EconPapers)
JEL-codes: A14 C70 D20 (search for similar items in EconPapers)
Pages: 28
Date: 2024-02-14
Note: In: International Journal of Economic Theory, 2024, vol. 20(2), p. 199-226
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Journal Article: 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:cor:louvrp:3285

DOI: 10.1111/ijet.12396

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