A Bargaining Approach To Coordination In Networks
AbstractThis paper presents a model in which players interact via the formation of costly links and the benefits of bilateral interactions are determined by a coordination game. A novel contribution of this paper is that the fraction of the cost borne by each player involved in a bilateral link is not fixed exogenously, but results from bargaining. We analyze the model both in a static and a dynamic setting. Whereas the static game has multiplicity of equilibria, we show that only one is stochastically stable.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2007-28.
Length: 28 pages
Date of creation: Dec 2007
Date of revision:
Publication status: Published by Ivie
Coordination; Nash bargaining solution; Risk-dominance; Stochastic stability;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-26 (All new papers)
- NEP-GTH-2008-01-26 (Game Theory)
- NEP-NET-2008-01-26 (Network Economics)
- NEP-ORE-2008-01-26 (Operations Research)
- NEP-SOC-2008-01-26 (Social Norms & Social Capital)
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