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Local farsightedness in network formation

Author

Listed:
  • de Callataÿ, Pierre
  • Mauleon, Ana

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

  • Vannetelbosch, Vincent

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

Abstract

We propose the concept of local‐k farsighted consistent network for analyzing network formation games where players only consider a limited number of feasible networks. A network g is said to be local‐k farsightedly consistent if, for any network g′ within the distance‐k neighborhood of g, either g is not defeated by g′, or g defeats g′. We show that if the utility function is (componentwise) egalitarian or satisfies reversibility or excludes externalities across components, then local‐k farsightedness is more likely to be a good proxy for what would happen when players have full knowledge of all feasible networks.

Suggested Citation

  • de Callataÿ, Pierre & Mauleon, Ana & Vannetelbosch, Vincent, 2024. "Local farsightedness in network formation," LIDAM Reprints CORE 3285, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:3285
    DOI: https://doi.org/10.1111/ijet.12396
    Note: In: International Journal of Economic Theory, 2024, vol. 20(2), p. 199-226
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    Cited by:

    1. Ata Atay & Sylvain Funck & Ana Mauleon & Vincent Vannetelbosch, 2025. "Matching markets with farsighted couples," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 64(3), pages 465-481, May.

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    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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