Networks and Stability

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Definition of the Subject

Our subject is networks, and in particular, stable networks and the game theoretic underpinnings of stable networks.

Networks are pervasive. We routinely communicate over the internet, advance our careers by networking, travel to conferences over the transportationnetwork and pay for the trip using the banking network. Doing this utilizes networks in our brain. The list could go on. While network models have hada long history in sociology, the natural sciences, and engineering (e. g., in modeling social organizations, brain architecture, and electricalcircuits), the rise of the network paradigm in economics is relatively recent. Economists are now beginning to think of political and economicinteractions as network phenomena and to model everything from terrorist activities to asset market micro structures as games ofnetwork formation. This trend in economics, which began with the seminal paper by Myerson [88] on graphs and cooperation and accelerated with the pu