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Costly Network Formation and Regular Equilibria

Author

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  • Francesco De Sinopoli

    (Dipartimento di Scienze Economiche, Universita degli Studi di Verona)

  • Carlos Pimienta

    (School of Economics, The University of New South Wales)

Abstract

We prove that for generic network-formation games where players incur some strictly positive cost to propose links the number of Nash equilibria is finite. Furthermore all Nash equilibria are regular and, therefore, stable sets.

Suggested Citation

  • Francesco De Sinopoli & Carlos Pimienta, 2009. "Costly Network Formation and Regular Equilibria," Discussion Papers 2009-05, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2009-05
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2009-05.pdf
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    References listed on IDEAS

    as
    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. De Sinopoli, Francesco, 2001. "On the Generic Finiteness of Equilibrium Outcomes in Plurality Games," Games and Economic Behavior, Elsevier, vol. 34(2), pages 270-286, February.
    3. 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.
    4. Park, In-Uck, 1997. "Generic Finiteness of Equilibrium Outcome Distributions for Sender-Receiver Cheap-Talk Games," Journal of Economic Theory, Elsevier, vol. 76(2), pages 431-448, October.
    5. Govindan, Srihari & McLennan, Andrew, 2001. "On the Generic Finiteness of Equilibrium Outcome Distributions in Game Forms," Econometrica, Econometric Society, vol. 69(2), pages 455-471, March.
    6. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
    7. Pimienta, Carlos, 2009. "Generic determinacy of Nash equilibrium in network-formation games," Games and Economic Behavior, Elsevier, vol. 66(2), pages 920-927, July.
    8. Francesco Sinopoli & Giovanna Iannantuoni, 2005. "On the generic strategic stability of Nash equilibria if voting is costly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(2), pages 477-486, February.
    9. Mertens, J.-F., 1988. "Stable equilibria - a reformulation," LIDAM Discussion Papers CORE 1988038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Calvo-Armengol, Antoni, 2004. "Job contact networks," Journal of Economic Theory, Elsevier, vol. 115(1), pages 191-206, March.
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    Cited by:

    1. Julia Müller & Thorsten Upmann, 2017. "Eigenvalue Productivity: Measurement of Individual Contributions in Teams," CESifo Working Paper Series 6679, CESifo.

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    More about this item

    Keywords

    Network-formation games; Regular equilibrium; Stable sets;
    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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