IDEAS home Printed from https://ideas.repec.org/a/wsi/igtrxx/v13y2011i01ns0219198911002848.html
   My bibliography  Save this article

Payoff Functions In The One-Way Flow Model Of Network Formation For Which Nash Networks Exist

Author

Listed:
  • JEAN DERKS

    (Department of Knowledge Engineering, Maastricht University, P. O. Box 616, 6200 MD, Maastricht, the Netherlands)

  • MARTIJN TENNEKES

    (Department of Knowledge Engineering, Maastricht University, P. O. Box 616, 6200 MD, Maastricht, the Netherlands)

Abstract

We study a non-cooperative model of unilateral network formation. Derkset al.[2008b] prove the existence of local-Nash and global-Nash networks for games with payoff functions that satisfy a framework of axiomatic properties. These properties are inspired by the one-way flow model, which is characterized by the following payoff structure. Each agent pays a cost for each formed link and receives profits from being connect to other agents. In this paper we fully characterize the payoff functions in the one-way flow model that satisfy all properties. We show that under certain conditions, payoff functions with heterogeneous link costs and heterogeneous profits satisfy all properties for which the existence of local-Nash networks is proved. Furthermore, we show that all payoff functions with owner-homogeneous link costs and heterogeneous profits satisfy all properties, and therefore imply the existence of global-Nash networks.

Suggested Citation

  • Jean Derks & Martijn Tennekes, 2011. "Payoff Functions In The One-Way Flow Model Of Network Formation For Which Nash Networks Exist," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(01), pages 61-73.
    • Handle: RePEc:wsi:igtrxx:v:13:y:2011:i:01:n:s0219198911002848
    DOI: 10.1142/S0219198911002848
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0219198911002848
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0219198911002848?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. Demange,Gabrielle & Wooders,Myrna (ed.), 2005. "Group Formation in Economics," Cambridge Books, Cambridge University Press, number 9780521842716, September.
    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. Jean-François Caulier & Ana Mauleon & Vincent Vannetelbosch, 2013. "Contractually stable networks," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(2), pages 483-499, May.
    2. Choi, Syngjoo & Gale, Douglas & Kariv, Shachar & Palfrey, Thomas, 2011. "Network architecture, salience and coordination," Games and Economic Behavior, Elsevier, vol. 73(1), pages 76-90, September.
    3. in 't Veld, Daan & van der Leij, Marco & Hommes, Cars, 2020. "The formation of a core-periphery structure in heterogeneous financial networks," Journal of Economic Dynamics and Control, Elsevier, vol. 119(C).
    4. Elsner, Wolfram & Heinrich, Torsten, 2009. "A simple theory of 'meso'. On the co-evolution of institutions and platform size--With an application to varieties of capitalism and 'medium-sized' countries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 843-858, October.
    5. Enrique Fatas & Miguel Meléndez-Jiménez & Hector Solaz, 2010. "An experimental analysis of team production in networks," Experimental Economics, Springer;Economic Science Association, vol. 13(4), pages 399-411, December.
    6. Chang, Chia-ling & Chen, Shu-heng, 2011. "Interactions in DSGE models: The Boltzmann-Gibbs machine and social networks approach," Economics Discussion Papers 2011-25, Kiel Institute for the World Economy (IfW Kiel).
    7. Ding, S. & Dziubinski, M. & Goyal, S., 2021. "Clubs and Networks," Janeway Institute Working Papers 2109, Faculty of Economics, University of Cambridge.
    8. Calvó-Armengol, Antoni & Patacchini, Eleonora & Zenou, Yves, 2005. "Peer Effects and Social Networks in Education and Crime," Working Paper Series 645, Research Institute of Industrial Economics.
    9. Swapnil Dhamal & Y. Narahari, 2015. "Formation of Stable Strategic Networks with Desired Topologies," Studies in Microeconomics, , vol. 3(2), pages 158-213, December.
    10. 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.
    11. Messan Agbaglah, 2017. "Overlapping coalitions, bargaining and networks," Theory and Decision, Springer, vol. 82(3), pages 435-459, March.
    12. Robin Cowan & Nicolas Jonard & Jean-Benoit Zimmermann, 2007. "Bilateral Collaboration and the Emergence of Innovation Networks," Management Science, INFORMS, vol. 53(7), pages 1051-1067, July.
    13. Alejandro Caparrós & Jean-Christophe Péreau, 2017. "Multilateral versus sequential negotiations over climate change," Oxford Economic Papers, Oxford University Press, vol. 69(2), pages 365-387.
    14. Wooders, Myrna, 2008. "Market games and clubs," MPRA Paper 33968, University Library of Munich, Germany, revised Dec 2010.
    15. Ana Mauleon & Huasheng Song & Vincent Vannetelbosch, 2010. "Networks of Free Trade Agreements among Heterogeneous Countries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(3), pages 471-500, June.
    16. Page Jr., Frank H. & Wooders, Myrna, 2009. "Strategic basins of attraction, the path dominance core, and network formation games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 462-487, May.
    17. Olivier Tercieux & Vincent Vannetelbosch, 2006. "A characterization of stochastically stable networks," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(3), pages 351-369, October.
    18. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2017. "The Economic Consequences of Social-Network Structure," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 49-95, March.
    19. Katharine A. Anderson, "undated". "Group Formation with a Network Constraint," GSIA Working Papers 2012-E49, Carnegie Mellon University, Tepper School of Business.
    20. Areej A. Malibari & Daniyal Alghazzawi & Maha M. A. Lashin, 2021. "Coalition Formation among the Cooperative Agents for Efficient Energy Consumption," Sustainability, MDPI, vol. 13(15), pages 1-18, August.

    More about this item

    Keywords

    Non-cooperative games; network formation; axiomatization; payoff functions; Subject Classification: C72; Subject Classification: D85;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

    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:wsi:igtrxx:v:13:y:2011:i:01:n:s0219198911002848. 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/igtr/igtr.shtml .

    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.