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Farsightedly stable networks

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  • HERINGS, Jean-Jacques
  • MAULEON, Ana
  • VANNETELBOSCH, Vincent

Abstract

We propose a new concept, the pairwise farsightedly stable set, in order to predict which networks may be formed among farsighted players. A set of networks G is pairwise farsightedly stable (i) if all possible pairwise deviations from any network g E G to a network outside G are deterred by the threat of endind worse off or equally well off, (ii) if there exists a farsightedly improving path from any network outside the set leading to some network in the set, and (iii) if there is no proper subset of G satisfying (i) and (ii). We show that a non-empty pairwise farsightedly stable set always exists and we provide a full characterization of unique pairwise farsightedly stable sets of networks. Contrary to other pairwise concepts, pairwise farsightedly yields a Pareto dominating betwork, if it exists, as the unique outcome. Finally, we study the relationship between pairwise farsightedly stability and other concepts such as the largest consistent set.
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Suggested Citation

  • HERINGS, Jean-Jacques & MAULEON, Ana & VANNETELBOSCH, Vincent, 2009. "Farsightedly stable networks," CORE Discussion Papers RP 2171, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:2171
    Note: In : Games and Economic Behavior, 67(2), 526-541, 2009
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    File URL: http://dx.doi.org/10.1016/j.geb.2008.12.009
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General

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