Abstract
In this chapter we revisit the network-formation model in strategic form that we saw in chapter 7. We study the conditions under which these strategic-form games satisfy the property that all the information that is necessary to determine Nash equilibria can be captured in a single function on the set of all strategy profiles. If such a function exists, it is called a potential function or just a potential, and a strategic-form game that has a potential is called a potential game. For potential games, the set of strategy profiles that maximize the potential constitute a refinement of Nash equilibrium. For network-formation games that are potential games, we study the network structures that are formed in potential-maximizing Nash equilibria.
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© 2001 Springer Science+Business Media New York
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Slikker, M., Van Den Nouweland, A. (2001). Network Formation and Potential Games. In: Social and Economic Networks in Cooperative Game Theory. Theory and Decision Library, vol 27. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-1569-2_10
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DOI: https://doi.org/10.1007/978-1-4615-1569-2_10
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4613-5619-6
Online ISBN: 978-1-4615-1569-2
eBook Packages: Springer Book Archive