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Forming Efficient Networks

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  • David Pérez-Castrillo
  • David Wettstein

Abstract

In this paper, we suggest a simple sequential mechanism whose subgame perfect equilibria give rise to efficient networks. Moreover, the payoffs received by the agents coincide with their Shapley value in an appropriately defined cooperative game.

Suggested Citation

  • David Pérez-Castrillo & David Wettstein, 2004. "Forming Efficient Networks," Working Papers 123, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:123
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    References listed on IDEAS

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    1. Navarro, Noemí & Perea, Andrés, 2001. "Bargaining in networks and the myerson value," UC3M Working papers. Economics we016121, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Perez-Castrillo, David & Wettstein, David, 2001. "Bidding for the Surplus : A Non-cooperative Approach to the Shapley Value," Journal of Economic Theory, Elsevier, vol. 100(2), pages 274-294, October.
    3. Mutuswami, Suresh & Winter, Eyal, 2002. "Subscription Mechanisms for Network Formation," Journal of Economic Theory, Elsevier, vol. 106(2), pages 242-264, October.
    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 & Mutuswami, Suresh, 1997. "Stable Networks," Journal of Economic Theory, Elsevier, vol. 76(2), pages 322-344, October.
      • Dutta, Bhaskar & Mutuswami, Suresh, 1996. "Stable Networks," Working Papers 971, California Institute of Technology, Division of the Humanities and Social Sciences.
    6. Jackson, Matthew O., 2005. "Allocation rules for network games," Games and Economic Behavior, Elsevier, vol. 51(1), pages 128-154, April.
    7. 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.
    8. Mutuswami, Suresh & Perez-Castrillo, David & Wettstein, David, 2004. "Bidding for the surplus: realizing efficient outcomes in economic environments," Games and Economic Behavior, Elsevier, vol. 48(1), pages 111-123, July.
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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. Sylvain Béal & Eric Rémila & Philippe Solal, 2017. "A strategic implementation of the sequential equal surplus division rule for digraph cooperative games," Annals of Operations Research, Springer, vol. 253(1), pages 43-59, June.
    3. Slikker, Marco, 2007. "Bidding for surplus in network allocation problems," Journal of Economic Theory, Elsevier, vol. 137(1), pages 493-511, November.
    4. Kamijo, Yoshio, 2008. "Implementation of weighted values in hierarchical and horizontal cooperation structures," Mathematical Social Sciences, Elsevier, vol. 56(3), pages 336-349, November.
    5. Matsubayashi, Nobuo & Yamakawa, Shigetaka, 2006. "A note on network formation with decay," Economics Letters, Elsevier, vol. 93(3), pages 387-392, December.
    6. van den Brink, René & van der Laan, Gerard & Moes, Nigel, 2013. "A strategic implementation of the Average Tree solution for cycle-free graph games," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2737-2748.

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    More about this item

    Keywords

    Networks; Implementation; shapley value;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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