Expected fair allocation in farsighted network formation
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I consider situations in which a group of players extracts a value if they organise themselves in different network structures, and I define a solution concept to describe the decentralised decision that determines the network formation process and the allocation of the value. I demonstrate that there is a solution concept satisfying discounted expected versions of pairwise stability (Jackson and Wolinsky J Econ Theory 71:44–74, 1996) and fairness (Myerson Math Oper Res 2:225–229, 1977a) jointly with the requirement that the allocation rule be component efficient if the players’ discount factor is sufficiently low.
I thank my PhD supervisor, Andrés Perea, for his constant support and assistance. Further comments from an anonymous referee and an associate editor, and financial support from the Spanish Ministry of Science and Innovation ECO2011-29355 are also acknowledged. All errors are mine.
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