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Expected fair allocation in farsighted network formation

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  • Noemí Navarro

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Abstract

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

Suggested Citation

  • Noemí Navarro, 2014. "Expected fair allocation in farsighted network formation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(2), pages 287-308, August.
  • Handle: RePEc:spr:sochwe:v:43:y:2014:i:2:p:287-308
    DOI: 10.1007/s00355-013-0777-4
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    References listed on IDEAS

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    1. 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.
    2. Slikker, Marco & van den Nouweland, Anne, 2001. "A One-Stage Model of Link Formation and Payoff Division," Games and Economic Behavior, Elsevier, vol. 34(1), pages 153-175, January.
    3. repec:cup:cbooks:9780511771576 is not listed on IDEAS
    4. Sergio Currarini & Massimo Morelli, 2000. "original papers : Network formation with sequential demands," Review of Economic Design, Springer;Society for Economic Design, vol. 5(3), pages 229-249.
    5. Dutta, Bhaskar & Ghosal, Sayantan & Ray, Debraj, 2005. "Farsighted network formation," Journal of Economic Theory, Elsevier, vol. 122(2), pages 143-164, June.
    6. Sanjeev Goyal, 2007. "Introduction to Connections: An Introduction to the Economics of Networks," Introductory Chapters,in: Connections: An Introduction to the Economics of Networks Princeton University Press.
    7. Navarro, Noemí, 2010. "Flexible network rules for identified externalities," Games and Economic Behavior, Elsevier, vol. 69(2), pages 401-410, July.
    8. Jackson, Matthew O., 2005. "Allocation rules for network games," Games and Economic Behavior, Elsevier, vol. 51(1), pages 128-154, April.
    9. 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.
    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. Easley,David & Kleinberg,Jon, 2010. "Networks, Crowds, and Markets," Cambridge Books, Cambridge University Press, number 9780521195331, October.
    12. Sergio Currarini & Massimo Morelli, 2000. "Network Formation with Sequential Demands," Royal Holloway, University of London: Discussion Papers in Economics 99/2, Department of Economics, Royal Holloway University of London, revised Feb 2000.
    13. Navarro, Noemi, 2007. "Fair allocation in networks with externalities," Games and Economic Behavior, Elsevier, vol. 58(2), pages 354-364, February.
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    Citations

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    Cited by:

    1. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2015. "An allocation rule for dynamic random network formation processes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(2), pages 283-313, October.
    2. Navarro Prada, Noemí, 2013. "Forward-looking Pairwise Stability in Networks with Externalities," IKERLANAK Ikerlanak;2013-71, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    3. Carayol, Nicolas & Delille, Rémy & Vannetelbosch, Vincent, 2015. "Allocating value among farsighted players in network formation," Economics Letters, Elsevier, vol. 137(C), pages 50-53.
    4. Boncinelli, Leonardo & Pin, Paolo, 2014. "Efficiency and Stability in a Process of Teams Formation," MPRA Paper 56356, University Library of Munich, Germany.
    5. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2015. "An allocation rule for dynamic random network formation," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01207823, HAL.
    6. repec:hal:journl:halshs-01207823 is not listed on IDEAS
    7. Jean-François Caulier & Michel Grabisch & Agnieszka Rusinowska, 2015. "An allocation rule for dynamic random network formation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01207823, HAL.

    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other

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