Social Choice and Welfare

, Volume 43, Issue 2, pp 287–308 | Cite as

Expected fair allocation in farsighted network formation

Original Paper

Abstract

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.

References

  1. Currarini S, Morelli M (2000) Network formation with sequential demands. Rev Econ Design 5:229–249CrossRefGoogle Scholar
  2. Dutta B, Ghosal S, Ray D (2005) Farsighted network formation. J Econ Theory 122:143–164CrossRefGoogle Scholar
  3. Easley D, Kleinberg J (2010) Networks, crowds, and markets: reasoning in a highly connected world. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  4. Feldman BE (1996) Bargaining, coalition formation, and value. Ph.D. Dissertation, State University of New York at Stony BrookGoogle Scholar
  5. Goyal S (2007) Connections: an introduction to the economics of networks. Princeton University Press, PrincetonGoogle Scholar
  6. Herings PJ-J, Mauleon A, Vannetelbosch V (2009) Farsightedly stable networks. Games Econ Behav 67:526–541CrossRefGoogle Scholar
  7. Jackson MO (2005) Allocation rules for network games. Games Econ Behav 51:128–154CrossRefGoogle Scholar
  8. Jackson MO (2008) Social and economic networks. Princeton University Press, PrincetonGoogle Scholar
  9. Jackson MO, Watts A (2002) The evolution of social and economic networks. J Econ Theory 106:265–295CrossRefGoogle Scholar
  10. Jackson MO, Wolinsky A (1996) A strategic model of social and economic networks. J Econ Theory 71:44–74CrossRefGoogle Scholar
  11. Myerson RB (1977a) Graphs and cooperation in games. Math Oper Res 2:225–229CrossRefGoogle Scholar
  12. Myerson RB (1977b) Values of games in partition function form. Int J Game Theory 6:23–31CrossRefGoogle Scholar
  13. Navarro N (2007) Fair allocation in networks with externalities. Games Econ Behav 58:354–364CrossRefGoogle Scholar
  14. Navarro N (2010) Flexible network rules for identified externalities. Games Econ Behav 69:401–410CrossRefGoogle Scholar
  15. Page FP Jr, Wooders MH, Kamat S (2005) Networks and farsighted stability. J Econ Theory 120:257–269CrossRefGoogle Scholar
  16. Rawls J (1971) A theory of justice. Harvard University Press, CambridgeGoogle Scholar
  17. Slikker M, van den Nouweland A (2000) A one stage model of link formation and payoff division. Games Econ Behav 34:153–175CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Fundamentos del Análisis Económico IUPV/EHU and IKERBASQUE, Basque Foundation for ScienceBilbaoSpain

Personalised recommendations