IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v215y2024ics0022053123001710.html
   My bibliography  Save this article

Close-knit neighborhoods: Stability of cooperation in networks

Author

Listed:
  • Polanski, Arnold

Abstract

Agents connected in a network face a binary choice whether to contribute or to free-ride. The former action is costly but benefits the agent and her neighbors, while the latter is free, but does not provide any benefits. Who will contribute if agents are farsighted and not constrained by a fixed non-cooperative protocol? I adapt the concepts of consistent sets and farsightedly stable sets to answer this question. When benefits to an agent are linear in the number of her contributing neighbors, the decision to contribute depends on the cohesion of her neighborhood as captured by the graph-theoretical concept of k-cores.

Suggested Citation

  • Polanski, Arnold, 2024. "Close-knit neighborhoods: Stability of cooperation in networks," Journal of Economic Theory, Elsevier, vol. 215(C).
    • Handle: RePEc:eee:jetheo:v:215:y:2024:i:c:s0022053123001710
    DOI: 10.1016/j.jet.2023.105775
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053123001710
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2023.105775?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006. "Who's Who in Networks. Wanted: The Key Player," Econometrica, Econometric Society, vol. 74(5), pages 1403-1417, September.
    2. Jürgen Eichberger & David Kelsey, 2014. "Optimism And Pessimism In Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(2), pages 483-505, May.
    3. Page, Frank Jr. & Wooders, Myrna H. & Kamat, Samir, 2005. "Networks and farsighted stability," Journal of Economic Theory, Elsevier, vol. 120(2), pages 257-269, February.
    4. , & , J. & ,, 2011. "Von Neumann-Morgenstern farsightedly stable sets in two-sided matching," Theoretical Economics, Econometric Society, vol. 6(3), September.
    5. JÊrÆme Renault & Tristan Tomala, 1998. "Repeated proximity games," International Journal of Game Theory, Springer;Game Theory Society, vol. 27(4), pages 539-559.
    6. Rachel T. A. Croson, 2007. "Theories Of Commitment, Altruism And Reciprocity: Evidence From Linear Public Goods Games," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 199-216, April.
    7. Herings, P. Jean-Jacques & Mauleon, Ana & Vannetelbosch, Vincent, 2020. "Matching with myopic and farsighted players," Journal of Economic Theory, Elsevier, vol. 190(C).
    8. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
    9. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2012. "Dynamics and Stability of Constitutions, Coalitions, and Clubs," American Economic Review, American Economic Association, vol. 102(4), pages 1446-1476, June.
    10. Herings, P. Jean-Jacques & Mauleon, Ana & Vannetelbosch, Vincent, 2009. "Farsightedly stable networks," Games and Economic Behavior, Elsevier, vol. 67(2), pages 526-541, November.
    11. Lippert, Steffen & Spagnolo, Giancarlo, 2011. "Networks of relations and Word-of-Mouth Communication," Games and Economic Behavior, Elsevier, vol. 72(1), pages 202-217, May.
    12. Haag, Matthew & Lagunoff, Roger, 2007. "On the size and structure of group cooperation," Journal of Economic Theory, Elsevier, vol. 135(1), pages 68-89, July.
    13. Mahesh Nagarajan & Greys Soši'{c}, 2007. "Stable Farsighted Coalitions in Competitive Markets," Management Science, INFORMS, vol. 53(1), pages 29-45, January.
    14. Markus Kinateder & Luca Paolo Merlino, 2017. "Public Goods in Endogenous Networks," American Economic Journal: Microeconomics, American Economic Association, vol. 9(3), pages 187-212, August.
    15. Dean Karlan & Markus Mobius & Tanya Rosenblat & Adam Szeidl, 2009. "Trust and Social Collateral," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1307-1361.
    16. Urs Fischbacher & Simon Gachter, 2010. "Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Goods Experiments," American Economic Review, American Economic Association, vol. 100(1), pages 541-556, March.
    17. Yann Bramoull? & Rachel Kranton & Martin D'Amours, 2014. "Strategic Interaction and Networks," American Economic Review, American Economic Association, vol. 104(3), pages 898-930, March.
    18. Ana Mauleon & Vincent Vannetelbosch, 2004. "Farsightedness and Cautiousness in Coalition Formation Games with Positive Spillovers," Theory and Decision, Springer, vol. 56(3), pages 291-324, May.
    19. Wolitzky, Alexander, 2015. "Communication with tokens in repeated games on networks," Theoretical Economics, Econometric Society, vol. 10(1), January.
    20. Glenn Ellison, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 567-588.
    21. Matthew O. Jackson & Tomas Rodriguez-Barraquer & Xu Tan, 2012. "Social Capital and Social Quilts: Network Patterns of Favor Exchange," American Economic Review, American Economic Association, vol. 102(5), pages 1857-1897, August.
    22. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald, 2021. "Farsighted manipulation and exploitation in networks," Journal of Economic Theory, Elsevier, vol. 196(C).
    23. Kawasaki, Ryo & Muto, Shigeo, 2009. "Farsighted stability in provision of perfectly "Lumpy" public goods," Mathematical Social Sciences, Elsevier, vol. 58(1), pages 98-109, July.
    24. Julien Gagnon & Sanjeev Goyal, 2017. "Networks, Markets, and Inequality," American Economic Review, American Economic Association, vol. 107(1), pages 1-30, January.
    25. Alexander Wolitzky, 2013. "Cooperation with Network Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 395-427.
    26. Laclau, M., 2014. "Communication in repeated network games with imperfect monitoring," Games and Economic Behavior, Elsevier, vol. 87(C), pages 136-160.
    27. Ben-Porath, Elchanan & Kahneman, Michael, 1996. "Communication in Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 70(2), pages 281-297, August.
    28. Konishi, Hideo & Ray, Debraj, 2003. "Coalition formation as a dynamic process," Journal of Economic Theory, Elsevier, vol. 110(1), pages 1-41, May.
    29. Matthew Elliott & Benjamin Golub, 2019. "A Network Approach to Public Goods," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 730-776.
    30. Jürgen Eichberger & David Kelsey, 2014. "Optimism And Pessimism In Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 483-505, May.
    31. S. Nageeb Ali & David A. Miller, 2016. "Ostracism and Forgiveness," American Economic Review, American Economic Association, vol. 106(8), pages 2329-2348, August.
    32. Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk-Sharing Arrangements," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(1), pages 87-113.
    33. Akihiro Suzuki & Shigeo Muto, 2005. "Farsighted Stability in an n-Person Prisoner’s Dilemma," International Journal of Game Theory, Springer;Game Theory Society, vol. 33(3), pages 431-445, September.
    34. Dunia López-Pintado & Duncan J. Watts, 2008. "Social Influence, Binary Decisions and Collective Dynamics," Rationality and Society, , vol. 20(4), pages 399-443, November.
    35. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 63-80.
    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. Fainmesser, Itay P. & Goldberg, David A., 2018. "Cooperation in partly observable networked markets," Games and Economic Behavior, Elsevier, vol. 107(C), pages 220-237.
    2. Balmaceda, Felipe & Escobar, Juan F., 2017. "Trust in cohesive communities," Journal of Economic Theory, Elsevier, vol. 170(C), pages 289-318.
    3. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald, 2021. "Farsighted manipulation and exploitation in networks," Journal of Economic Theory, Elsevier, vol. 196(C).
    4. Kimya, Mert, 2021. "Coalition Formation Under Dominance Invariance," Working Papers 202106, University of Sydney, School of Economics.
    5. Oguzhan Celebi, 2023. "Substitutability in Favor Exchange," Papers 2309.10749, arXiv.org.
    6. Korpela, Ville & Lombardi, Michele & Vartiainen, Hannu, 2021. "Implementation in largest consistent set via rights structures," Games and Economic Behavior, Elsevier, vol. 128(C), pages 202-212.
    7. Itay P. Fainmesser & David A. Goldberg, 2011. "Bilateral and Community Enforcement in a Networked Market with Simple Strategies," Working Papers 2011-2, Brown University, Department of Economics.
    8. Korpela, Ville & Lombardi, Michele & Vartiainen, Hannu, 2019. "Implementation with foresighted agents," MPRA Paper 102496, University Library of Munich, Germany.
    9. Itay P. Fainmesser, 2012. "Community Structure and Market Outcomes: A Repeated Games-in-Networks Approach," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 32-69, February.
    10. Mert Kimya, 2023. "Coalition Formation Under Dominance Invariance," Dynamic Games and Applications, Springer, vol. 13(2), pages 480-496, June.
    11. Kimya, Mert, 2020. "Equilibrium coalitional behavior," Theoretical Economics, Econometric Society, vol. 15(2), May.
    12. Kimya, Mert, 2021. "Coalition Formation Under Dominance Invariance," Working Papers 2021-06, University of Sydney, School of Economics.
    13. , & ,, 2014. "Efficiency in repeated games with local interaction and uncertain local monitoring," Theoretical Economics, Econometric Society, vol. 9(1), January.
    14. P. Jean-Jacques Herings & Ana Mauleon & Vincent Vannetelbosch, 2023. "Social Rationalizability with Mediation," Dynamic Games and Applications, Springer, vol. 13(2), pages 440-461, June.
    15. Feinberg, Yossi & Kets, Willemien, 2014. "Ranking friends," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 1-9.
    16. Eleonora Patacchini & Edoardo Rainone, 2017. "Social Ties and the Demand for Financial Services," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 35-88, October.
    17. Mariya Teteryatnikova, 2021. "Cautious farsighted stability in network formation games with streams of payoffs," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(4), pages 829-865, December.
    18. Chih-Sheng Hsieh & Stanley I. M. Ko & Jaromír Kovářík & Trevon Logan, 2018. "Non-Randomly Sampled Networks: Biases and Corrections," NBER Working Papers 25270, National Bureau of Economic Research, Inc.
    19. Daron Acemoglu & Alexander Wolitzky, 2015. "Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement," Levine's Bibliography 786969000000001179, UCLA Department of Economics.
    20. Ana Mauleon & Jose J. Sempere-Monerris & Vincent Vannetelbosch, 2023. "Limited Farsightedness in R &D Network Formation," Dynamic Games and Applications, Springer, vol. 13(2), pages 549-565, June.

    More about this item

    Keywords

    Public goods; Networks; Consistent sets; Farsightedly stable sets;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

    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:eee:jetheo:v:215:y:2024:i:c:s0022053123001710. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    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.