Strategic formation of homogeneous bargaining networks
Strategic formation of homogeneous bargaining networks
We study a model of strategic network formation prior to a Manea (2011a) bargaining game: ex ante homogeneous players form costly undirected links, anticipating expected equilibrium payoffs from the subsequent bargaining game. Assuming patient players, we provide a complete characterization of generically pairwise stable networks: specific unions of separated pairs, odd circles, and isolated players constitute this class. We also show that many other structures, such as larger trees or unbalanced bipartite networks, cannot be pairwise stable at all. The analysis implies that the diversity of possible bargaining outcomes is small in (generically) pairwise stable networks.
Bargaining, Network formation, Noncooperative games
51-74
Gauer, Florian
ba80b856-3d50-41c2-89c0-e146fa05de09
Hellmann, Tim
e03b4edd-3010-4f6d-831e-86e4b3d6cbe0
November 2017
Gauer, Florian
ba80b856-3d50-41c2-89c0-e146fa05de09
Hellmann, Tim
e03b4edd-3010-4f6d-831e-86e4b3d6cbe0
Gauer, Florian and Hellmann, Tim
(2017)
Strategic formation of homogeneous bargaining networks.
Games and Economic Behavior, 106, .
(doi:10.1016/j.geb.2017.09.011).
Abstract
We study a model of strategic network formation prior to a Manea (2011a) bargaining game: ex ante homogeneous players form costly undirected links, anticipating expected equilibrium payoffs from the subsequent bargaining game. Assuming patient players, we provide a complete characterization of generically pairwise stable networks: specific unions of separated pairs, odd circles, and isolated players constitute this class. We also show that many other structures, such as larger trees or unbalanced bipartite networks, cannot be pairwise stable at all. The analysis implies that the diversity of possible bargaining outcomes is small in (generically) pairwise stable networks.
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Accepted/In Press date: 17 September 2017
e-pub ahead of print date: 29 September 2017
Published date: November 2017
Keywords:
Bargaining, Network formation, Noncooperative games
Identifiers
Local EPrints ID: 435590
URI: http://eprints.soton.ac.uk/id/eprint/435590
ISSN: 0899-8256
PURE UUID: 7cf97ee0-c0d1-47fc-abda-4655aa373a64
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Date deposited: 12 Nov 2019 17:30
Last modified: 16 Mar 2024 04:54
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Author:
Florian Gauer
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