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The Assignment Game With Negative Externalities And Bounded Rationality

Author

Listed:
  • KIMMO ERIKSSON

    (Centre for the Study of Cultural Evolution, Stockholm University, SE-106 91 Stockholm, Sweden;
    Division of Applied Mathematics, School of Education, Culture and Communication, Mälardalen University, Box 883, SE-721 23 Västerås, Sweden)

  • FREDRIK JANSSON

    (Centre for the Study of Cultural Evolution, Stockholm University, SE-106 91 Stockholm, Sweden;
    Division of Applied Mathematics, School of Education, Culture and Communication, Mälardalen University, Box 883, SE-721 23 Västerås, Sweden)

  • THOMAS VETANDER

    (Centre for the Study of Cultural Evolution, Stockholm University, SE-106 91 Stockholm, Sweden;
    Division of Applied Mathematics, School of Education, Culture and Communication, Mälardalen University, Box 883, SE-721 23 Västerås, Sweden)

Abstract

We introduce negative externalities in the form of ill will among the players of the classic two-sided assignment game of Shapley and Shubik, by letting each player's utility be negatively correlated with the payoff of all the players in his group. The new game is very complex, but under a certain assumption of bounded rationality we derive a straightforward notion of stable outcomes as certain conjectural equilibria. We prove that several well-known properties of the set of stable outcomes in the assignment game carry over to this new game.

Suggested Citation

  • Kimmo Eriksson & Fredrik Jansson & Thomas Vetander, 2011. "The Assignment Game With Negative Externalities And Bounded Rationality," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(04), pages 443-459.
    • Handle: RePEc:wsi:igtrxx:v:13:y:2011:i:04:n:s0219198911003088
    DOI: 10.1142/S0219198911003088
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    References listed on IDEAS

    as
    1. anonymous, 2008. "Money museum," TEN, Federal Reserve Bank of Kansas City, issue Fall, pages 22-23.
    2. Roth, Alvin E & Vande Vate, John H, 1990. "Random Paths to Stability in Two-Sided Matching," Econometrica, Econometric Society, vol. 58(6), pages 1475-1480, November.
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    Cited by:

    1. Marek Pycia & M Bumin Yenmez, 2023. "Matching with Externalities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 948-974.
    2. Piazza, Adriana & Torres-Martínez, Juan Pablo, 2024. "Coalitional stability in matching problems with externalities and random preferences," Games and Economic Behavior, Elsevier, vol. 143(C), pages 321-339.
    3. Gudmundsson, Jens & Habis, Helga, 2013. "Assignment Games with Externalities," Working Papers 2013:27, Lund University, Department of Economics.
    4. R. Branzei & E. Gutiérrez & N. Llorca & J. Sánchez-Soriano, 2021. "Does it make sense to analyse a two-sided market as a multi-choice game?," Annals of Operations Research, Springer, vol. 301(1), pages 17-40, June.
    5. Jens Gudmundsson & Helga Habis, 2017. "Assignment games with externalities revisited," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(2), pages 247-257, October.

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    More about this item

    Keywords

    Two-sided matching; stable outcome; bounded rationality; assignment game; social preferences; negative externalities; C71; C78; D62;
    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

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