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Coalition-proof stable networks

Author

Listed:
  • Chenghong Luo

    (UCLouvain
    Ca’ Foscari University of Venice)

  • Ana Mauleon

    (UCLouvain)

  • Vincent Vannetelbosch

    (UCLouvain)

Abstract

We propose the notion of coalition-proof stability for predicting the networks that could emerge when group deviations are allowed. A network is coalition-proof stable if there exists no coalition which has a credible group deviation. A coalition is said to have a credible group deviation if there is a profitable group deviation to some network and there is no subcoalition of the deviating players which has a subsequent credible group deviation. Coalition-proof stability is a coarsening of strong stability. We emphasize the importance of coalition-proof stability by considering four models where a strongly stable network fails to exist while a coalition-proof stable network does exist. We provide an easy to verify condition for the existence of a coalition-proof stable network while a strongly stable network may not exist. There is no relationship between the set of coalition-proof stable networks and the set of networks induced by a coalition-proof Nash equilibrium of Myerson’s linking game.

Suggested Citation

  • Chenghong Luo & Ana Mauleon & Vincent Vannetelbosch, 2022. "Coalition-proof stable networks," Review of Economic Design, Springer;Society for Economic Design, vol. 26(2), pages 185-209, June.
    • Handle: RePEc:spr:reecde:v:26:y:2022:i:2:d:10.1007_s10058-021-00264-5
    DOI: 10.1007/s10058-021-00264-5
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    More about this item

    Keywords

    Networks; Stability; Group deviations; Coalition-proofness; Existence and efficiency; Farsightedness;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General

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