Expected fair allocation in farsighted network formation

I consider situations in which a group of players extracts a value if they organise themselves in different network structures, and I define a solution concept to describe the decentralised decision that determines the network formation process and the allocation of the value. I demonstrate that there is a solution concept satisfying discounted expected versions of pairwise stability (Jackson and Wolinsky J Econ Theory 71:44–74, 1996 ) and fairness (Myerson Math Oper Res 2:225–229, 1977a ) jointly with the requirement that the allocation rule be component efficient if the players’ discount factor is sufficiently low. Copyright Springer-Verlag Berlin Heidelberg 2014