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A Noncooperative Model of Contest Network Formation

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  • Kenan Huremovic

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

Abstract

In this paper we study a situation in which agents embedded in a network simultaneously play interrelated bilateral contest games with their neighbors. Spillovers between contests induce complex local and global network effects. We first characterize the equilibrium of the game on a given network. Then we study a network formation model, introducing a novel but intuitive link formation protocol. As links represent negative relationships, link formation is unilateral while link destruction is bilateral. The unique stable network topology is a complete K-partite network with partitions of different sizes. Stable networks exhibit properties that are in line with empirical and theoretical findings from other disciplines.

Suggested Citation

  • Kenan Huremovic, 2016. "A Noncooperative Model of Contest Network Formation," Working Papers halshs-01154676, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01154676
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01154676v2
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    References listed on IDEAS

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    1. Fuente,Angel de la, 2000. "Mathematical Methods and Models for Economists," Cambridge Books, Cambridge University Press, number 9780521585293, July - De.
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    Cited by:

    1. Xu, Jin & Zenou, Yves & Zhou, Junjie, 2019. "Networks in Conflict: A Variational Inequality Approach," CEPR Discussion Papers 13647, C.E.P.R. Discussion Papers.
    2. Cortes-Corrales, Sebastián & Gorny, Paul M., 2018. "Generalising Conflict Networks," MPRA Paper 90001, University Library of Munich, Germany.

    More about this item

    Keywords

    contest; game on network; network formation; structural balance;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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