IDEAS home Printed from https://ideas.repec.org/p/bie/wpaper/529.html
   My bibliography  Save this paper

Strategic formation of homogeneous bargaining networks

Author

Listed:
  • Gauer, Florian

    (Center for Mathematical Economics, Bielefeld University)

  • Hellmann, Tim

    (Center for Mathematical Economics, Bielefeld University)

Abstract

We study a model of strategic network formation prior to a Manea (2011a) bargaining game: ex-ante homogeneous players form costly undirected links, anticipating expected equilibrium payoffs from the subsequent bargaining game. Assuming patient players, we provide a complete characterization of generically pairwise stable networks: specific unions of separated pairs, odd circles, and isolated players constitute this class. We also show that many other structures, such as larger trees or unbalanced bipartite networks, cannot be pairwise stable at all. The analysis implies that the diversity of possible bargaining outcomes is small in (generically) pairwise stable networks.

Suggested Citation

  • Gauer, Florian & Hellmann, Tim, 2017. "Strategic formation of homogeneous bargaining networks," Center for Mathematical Economics Working Papers 529, Center for Mathematical Economics, Bielefeld University.
    • Handle: RePEc:bie:wpaper:529
    as

    Download full text from publisher

    File URL: https://pub.uni-bielefeld.de/download/2913287/2913324
    File Function: First Version, 2017
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    3. Hellmann, Tim & Landwehr, Jakob, 2018. "Pairwise stable networks in homogeneous societies," Center for Mathematical Economics Working Papers 517, Center for Mathematical Economics, Bielefeld University.
    4. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-1150, September.
    5. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
    6. Arnold Polanski & Fernando Vega-Redondo, 2013. "Markets, Bargaining, and Networks with Heterogeneous Agents," University of East Anglia Applied and Financial Economics Working Paper Series 038, School of Economics, University of East Anglia, Norwich, UK..
    7. Condorelli, Daniele & Galeotti, Andrea, 2012. "Endogenous Trading Networks," Economics Discussion Papers 2871, University of Essex, Department of Economics.
    8. Tim Hellmann, 2013. "On the existence and uniqueness of pairwise stable networks," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(1), pages 211-237, February.
    9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    10. Corominas-Bosch, Margarida, 2004. "Bargaining in a network of buyers and sellers," Journal of Economic Theory, Elsevier, vol. 115(1), pages 35-77, March.
    11. Abreu, Dilip & Manea, Mihai, 2012. "Bargaining and efficiency in networks," Journal of Economic Theory, Elsevier, vol. 147(1), pages 43-70.
    12. Mihai Manea, 2011. "Bargaining in Stationary Networks," American Economic Review, American Economic Association, vol. 101(5), pages 2042-2080, August.
    13. Rachel E. Kranton & Deborah F. Minehart, 2001. "A Theory of Buyer-Seller Networks," American Economic Review, American Economic Association, vol. 91(3), pages 485-508, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gauer, F. & Hellmann, T., 2017. "Strategic formation of homogeneous bargaining networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 51-74.
    2. Gauer, Florian, 2015. "Strategic Formation of Homogeneous Bargaining Networks," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112943, Verein für Socialpolitik / German Economic Association.
    3. Bedayo, Mikel & Mauleon, Ana & Vannetelbosch, Vincent, 2016. "Bargaining in endogenous trading networks," Mathematical Social Sciences, Elsevier, vol. 80(C), pages 70-82.
    4. Thành Nguyen, 2015. "Coalitional Bargaining in Networks," Operations Research, INFORMS, vol. 63(3), pages 501-511, June.
    5. BEDAYO, Mikel & MAULEON, Ana & VANNETELBOSCH, Vincent, 2012. "Bargaining and delay in trading networks," LIDAM Discussion Papers CORE 2012046, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Bayati, Mohsen & Borgs, Christian & Chayes, Jennifer & Kanoria, Yash & Montanari, Andrea, 2015. "Bargaining dynamics in exchange networks," Journal of Economic Theory, Elsevier, vol. 156(C), pages 417-454.
    7. Elif Özcan-Tok, 2020. "Bargaining on supply chain networks with heterogeneous valuations," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 28(2), pages 506-525, July.
    8. Donna, Javier D. & Schenone, Pablo & Veramendi, Gregory F., 2020. "Networks, frictions, and price dispersion," Games and Economic Behavior, Elsevier, vol. 124(C), pages 406-431.
    9. Priazhkina, Sofia & Page, Frank H., 2018. "Sharing market access in buyer–seller networks," Journal of Economic Theory, Elsevier, vol. 175(C), pages 415-446.
    10. Cho, Myeonghwan, 2021. "Trading networks of price-taking buyers and sellers," Journal of Economic Theory, Elsevier, vol. 196(C).
    11. Talamàs, Eduard, 2019. "Price dispersion in stationary networked markets," Games and Economic Behavior, Elsevier, vol. 115(C), pages 247-264.
    12. Charness, Gary & Corominas-Bosch, Margarida & Frechette, Guillaume R., 2007. "Bargaining and network structure: An experiment," Journal of Economic Theory, Elsevier, vol. 136(1), pages 28-65, September.
    13. Abreu, Dilip & Manea, Mihai, 2012. "Markov equilibria in a model of bargaining in networks," Games and Economic Behavior, Elsevier, vol. 75(1), pages 1-16.
    14. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    15. Darpö, Erik & Domínguez, Alvaro & Martín-Rodríguez, María, 2023. "Formation of Networks in a Context with Diversity," AGI Working Paper Series 2023-02, Asian Growth Research Institute.
    16. Matthew Elliott & Arun Chandrasekhar & Attila Ambrus, 2015. "Social Investments, Informal Risk Sharing, and Inequality," 2015 Meeting Papers 189, Society for Economic Dynamics.
    17. Arnold Polanski, 2016. "Matching structure and bargaining outcomes in buyer–seller networks," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(4), pages 767-776, April.
    18. Elliott, Matt & Nava, Francesco, 2019. "Decentralized bargaining in matching markets: efficient stationary equilibria and the core," LSE Research Online Documents on Economics 87219, London School of Economics and Political Science, LSE Library.
    19. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
    20. repec:zbw:bofrdp:2017_020 is not listed on IDEAS
    21. Qi Feng & Chengzhang Li & Mengshi Lu & J. George Shanthikumar, 2022. "Implementing Environmental and Social Responsibility Programs in Supply Networks Through Multiunit Bilateral Negotiation," Management Science, INFORMS, vol. 68(4), pages 2579-2599, April.

    More about this item

    Keywords

    Bargaining; Network Formation; Noncooperative Games;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bie:wpaper:529. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bettina Weingarten (email available below). General contact details of provider: https://edirc.repec.org/data/imbiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.