Journal
INTERNATIONAL JOURNAL OF GAME THEORY
Volume 49, Issue 2, Pages 345-384Publisher
SPRINGER HEIDELBERG
DOI: 10.1007/s00182-020-00714-4
Keywords
Network formation; Foresight; Efficiency
Categories
Funding
- ONR [N00014-15-1-2038]
- NSFC [71803167]
Ask authors/readers for more resources
What networks can form and persist when agents are self-interested? Can such networks be efficient? A substantial theoretical literature predicts that various networks emerge randomly and efficiency is unlikely to be sustained, but these predictions are in stark contrast to empirical findings. In this paper, we present a new model of network formation. In contrast to the existing literature, we assume that agents are foresighted (rather than myopic) and have some but not necessarily all information about the history. We provide a tight characterization of the sustainable networks; in particular, efficient networks can form and persist if they provide every agent a strictly positive payoff. Our results are robust to model variations, while evidence from empirical networks suggests a modest improvement in prediction by our model compared with models with agent myopia.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available