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Dynamics in tree formation games

  • Arcaute, E.
  • Dyagilev, K.
  • Johari, R.
  • Mannor, S.
Registered author(s):

    Network formation games capture two conflicting objectives of selfish nodes in a network: such nodes wish to form a well-connected network and, at the same time, to minimize their cost of participation. We consider three families of such models where nodes avoid forming edges beyond those necessary for connectivity, thus forming tree networks. We focus on two local two-stage best-response dynamics in these models, where nodes can only form links with others in a restricted neighborhood. Despite this locality, both our dynamics converge to efficient outcomes in two of the considered families of models. In the third family of models, both our dynamics guarantee at most constant efficiency loss. This is in contrast with the standard best-response dynamics whose efficiency loss is unbounded in all three families of models. Thus we present a globally constrained network formation game where local dynamics naturally select desirable outcomes.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0899825613000055
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 79 (2013)
    Issue (Month): C ()
    Pages: 1-29

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    Handle: RePEc:eee:gamebe:v:79:y:2013:i:c:p:1-29
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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    1. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
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    4. Ma Jinpeng, 1995. "Stable Matchings and Rematching-Proof Equilibria in a Two-Sided Matching Market," Journal of Economic Theory, Elsevier, vol. 66(2), pages 352-369, August.
    5. 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.
    6. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945, June.
    7. Johari, Ramesh & Mannor, Shie & Tsitsiklis, John N., 2006. "A contract-based model for directed network formation," Games and Economic Behavior, Elsevier, vol. 56(2), pages 201-224, August.
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    9. Oecd, 2001. "The Internet and Business Performance," OECD Digital Economy Papers 57, OECD Publishing.
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