Subscription Mechanisms for Network Formation
AbstractWe analyze a model of network formation where the costs of link formation are publicly known but individual benefits are not known to the social planner. The objective is to design a simple mechanism ensuring efficiency, budget balance and equity. We propose two mechanisms towards this end; the first ensures efficiency and budget balance but not equity. The second mechanism corrects the asymmetry in payoffs through a two-stage variant of the first mechanism. We also discuss an extension of the basic model to cover the case of directed graphs and give conditions under which the proposed mechanisms are immune to coalitional deviations.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 106 (2002)
Issue (Month): 2 (October)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- MUTUSWAMI, Suresh & WINTER, Eyal, 2000. "Subscription mechanisms for network formation," CORE Discussion Papers 2000020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Suresh Mutuswami & Eyal Winter, 2001. "Subscription Mechanisms for Network Formation," Discussion Paper Series dp264, The Center for the Study of Rationality, Hebrew University, Jerusalem.
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