Network Design in Games with Spillovers
How should an organization be designed in order to provide its members with minimal incentives to defect? And how does the optimal design depend on the type of strategic interaction between defectors and remaining organizational members? This paper addresses such issues in a game theoretic model of cooperation, in which an organization is formally represented by a connected network, and where gains from cooperation are given by a partition function. We show that critical structural features of the organization depend in a clear-cut way on the sign of spillovers. In particular, positive spillovers favor the adoption of dispersed and centralized forms, while negative spillovers favor cohesive and horizontal ones. Moreover, if the organizational form determines all the communication possibilities of members, a highly centralized organization - the star - emerges under positive spillovers, whereas two horizontal architectures - the circle and the complete - emerge under negative spillovers.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
- Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-91, September.
- Ray, D. & Vohra, R., 1993.
"Equilibrium Binding Agreements,"
21, Boston University - Department of Economics.
- Jackson, Matthew O. & van den Nouweland, Anne, 2005.
"Strongly stable networks,"
Games and Economic Behavior,
Elsevier, vol. 51(2), pages 420-444, May.
- Matthew O. Jackson, 2001. "Strongly Stable Networks," University of Oregon Economics Department Working Papers 2001-3, University of Oregon Economics Department, revised 15 Nov 2002.
- Matthew O. Jackson & Anne van den Nouweland, 2002. "Strongly Stable Networks," Microeconomics 0211006, EconWPA.
- Jackson, Matthew O. & van den Nouweland, Anne, 2002. "Strongly Stable Networks," Working Papers 1147, California Institute of Technology, Division of the Humanities and Social Sciences.
- Bolton, Patrick & Dewatripont, Mathias, 1994.
"The Firm as a Communication Network,"
The Quarterly Journal of Economics,
MIT Press, vol. 109(4), pages 809-39, November.
- Mathias Dewatripont & Patrick Bolton, 1994. "The firm as a communication network," ULB Institutional Repository 2013/9595, ULB -- Universite Libre de Bruxelles.
- Mathias Dewatripont & Patrick Bolton, 2004. "The firm as a communication network," ULB Institutional Repository 2013/9599, ULB -- Universite Libre de Bruxelles.
- Mathias Dewatripont & Patrick Bolton, 1996. "The firm as a communication network," ULB Institutional Repository 2013/9597, ULB -- Universite Libre de Bruxelles.
- Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1994. "The Wage Policy of a Firm," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 921-55, November.
- Sergio Currarini, 2006.
"Group Stability of Hierarchies in Games with Spillovers,"
2006_14, Department of Economics, University of Venice "Ca' Foscari".
- Currarini, Sergio, 2007. "Group stability of hierarchies in games with spillovers," Mathematical Social Sciences, Elsevier, vol. 54(3), pages 187-202, December.
- Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-46, September.
- Matthew O. Jackson, 2003.
"Allocation Rules for Network Games,"
1160, California Institute of Technology, Division of the Humanities and Social Sciences.
- Gabrielle Demange, 2004.
"On Group Stability in Hierarchies and Networks,"
Journal of Political Economy,
University of Chicago Press, vol. 112(4), pages 754-778, August.
- Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
- Ichiishi, Tatsuro, 1981. "A Social Coalitional Equilibrium Existence Lemma," Econometrica, Econometric Society, vol. 49(2), pages 369-77, March.
When requesting a correction, please mention this item's handle: RePEc:ven:wpaper:2006_16. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geraldine Ludbrook)
If references are entirely missing, you can add them using this form.