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Towards a solution concept for network formation games

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  • Gallo, Andrea
  • Meroni, Claudia

Abstract

Network formation games (Myerson, 1991) typically present a multiplicity of Nash equilibria. Some of them are such that mutually beneficial links are not formed, thus inducing networks that are not pairwise stable. We offer an equilibrium refinement for this class of games which naturally involves pairwise stability while guaranteeing admissibility.

Suggested Citation

  • Gallo, Andrea & Meroni, Claudia, 2021. "Towards a solution concept for network formation games," Economics Letters, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:ecolet:v:198:y:2021:i:c:s0165176520304316
    DOI: 10.1016/j.econlet.2020.109671
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    References listed on IDEAS

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    1. Antoni Calvó-Armengol & Rahmi İlkılıç, 2009. "Pairwise-stability and Nash equilibria in network formation," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(1), pages 51-79, March.
    2. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    3. Francesco Sinopoli & Claudia Meroni, 2018. "A concept of sincerity for combinatorial voting," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(3), pages 493-512, October.
    4. Rahmi İlkılıç & Hüseyin İkizler, 2019. "Equilibrium refinements for the network formation game," Review of Economic Design, Springer;Society for Economic Design, vol. 23(1), pages 13-25, June.
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    More about this item

    Keywords

    Network formation games; Equilibrium refinement; Pairwise stability;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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