Network Formation with Sequential Demands
This paper introduces a non-cooperative game-theoretic model of sequential network formation, in which players propose links and demand payoffs. Payoff division is therefore endogenous. We show that if the value of networks satisfies size-monotonicity, then each and every equilibrium network is efficient. Formation of networks satisfies size-monotonicity, then each and equilibrium network is efficient. Formation of networks through bilateral every negotiations (link-specific demands) and through absolute participation demands turn out to have the same efficiency properties. The result do not extend to the case in which players can only demand relative shares
|Date of creation:||Feb 2000|
|Date of revision:||Feb 2000|
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