Existence of Nash networks and partner heterogeneity
AbstractIn this paper, we pursue the line of research initiated by Haller and Sarangi (2005). We examine the existence of equilibrium networks called Nash networks in the non-cooperative two-way flow model by Bala and Goyal (2000a,b) in the presence of partner heterogeneity. First, we show through an example that Nash networks in pure strategies do not always exist in such model. We then impose restrictions on the payoff function to find conditions under which Nash networks always exist. We provide two properties—increasing differences and convexity in the first argument of the payoff function that ensure the existence of Nash networks. Note that the commonly used linear payoff function satisfies these two properties.
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Bibliographic InfoArticle provided by Elsevier in its journal Mathematical Social Sciences.
Volume (Year): 64 (2012)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/505565
Other versions of this item:
- Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2011. "Existence of Nash Networks and Partner Heterogeneity," Working Papers 1111, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2011. "Existence of Nash Networks and Partner Heterogeneity," Post-Print halshs-00574277, HAL.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
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