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Contractually stable networks

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  • Jean-François Caulier

    ()

  • Ana Mauleon

    ()

  • Vincent Vannetelbosch

    ()

Abstract

We consider situations where players are part of a network and belong to coalitions in a given coalition structure. We propose the concept of contractual stability to predict the networks that are going to emerge at equilibrium when the consent of coalition partners is needed for adding or deleting links. Two different decision rules for consent are analyzed: simple majority and unanimity. We characterize the coalition structures that make the strongly efficient network contractually stable under the unanimity decision rule and the coalition structures that sustain some critical network as contractually stable under the simple majority decision rule and under any decision rule requiring the consent of any proportion of coalition partners. Requiring the consent of coalition members may help to reconcile stability and efficiency in some classical models of network formation. Copyright Springer-Verlag Berlin Heidelberg 2013

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Bibliographic Info

Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 42 (2013)
Issue (Month): 2 (May)
Pages: 483-499

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Handle: RePEc:spr:jogath:v:42:y:2013:i:2:p:483-499

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Related research

Keywords: Networks; Coalition structures; Contractual stability; Strong efficiency; A14; C70;

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References

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  1. Sanjeev Goyal & Sumit Joshi, 2000. "Networks of Collaboration in Oligopoly," Tinbergen Institute Discussion Papers 00-092/1, Tinbergen Institute.
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  8. Jean-Jacques HERINGS & Ana MAULEON & Vincent J. VANNETELBOSCH, 2001. "Rationalizability for Social Environments," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001028, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  13. Sanjeev Goyal & Sumit Joshi, 2006. "Bilateralism And Free Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 749-778, 08.
  14. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
  15. Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn.
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  17. Ping Wang & Alison Watts, 2006. "Formation of buyer-seller trade networks in a quality-differentiated product market," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 971-1004, August.
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Cited by:
  1. repec:pdn:wpaper:73 is not listed on IDEAS
  2. Nils Roehl, 2013. "Two-Stage Allocation Rules," Working Papers CIE 73, University of Paderborn, CIE Center for International Economics.
  3. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2013. "An allocation rule for dynamic random network formation processes," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881125, HAL.
  4. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2013. "An allocation rule for dynamic random network formation processes," Documents de travail du Centre d'Economie de la Sorbonne 13063, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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