Pairwise-Stability and Nash Equilibria in Network Formation

Arbeitspapier

Suppose that individual payoffs depend on the network connecting them. Consider the following simultaneous move game of network formation: players announce independently the links they wish to form, and links are formed only under mutual consent. We provide necessary and sufficient conditions on the network link marginal payoffs such that the set of pairwise stable, pairwise-Nash and proper equilibrium networks coincide, where pairwise stable networks are robust to one-link deviations, while pairwise-Nash networks are robust to one-link creation but multi-link severance. Under these conditions, proper equilibria in pure strategies are fully characterized by one-link deviation checks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 34.2005

Classification and Topics

• Classification: Wirtschaft ; Existence and Stability Conditions of Equilibrium ; Noncooperative Games ; Network Formation and Analysis: Theory ; Transactional Relationships; Contracts and Reputation; Networks
• Subject: Network formation ; Pairwise-stability ; Proper equilibrium ; Nash-Gleichgewicht ; Netzwerk ; Spieltheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Calvó-Armengol, Antoni ; Ilkiliç, Rahmi
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/74247
• Last update: 10.03.2025, 11:43 AM CET