Network formation games (Myerson, 1991) typically present a multiplicity of Nash equilibria. Some of them are such that mutually beneficial links are not formed, thus inducing networks that are not pairwise stable. We offer an equilibrium refinement for this class of games which naturally involves pairwise stability while guaranteeing admissibility.
Towards a solution concept for network formation games / A. Gallo, C. Meroni. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - 198(2021 Jan). [10.1016/j.econlet.2020.109671]
Towards a solution concept for network formation games
C. Meroni
Ultimo
2021
Abstract
Network formation games (Myerson, 1991) typically present a multiplicity of Nash equilibria. Some of them are such that mutually beneficial links are not formed, thus inducing networks that are not pairwise stable. We offer an equilibrium refinement for this class of games which naturally involves pairwise stability while guaranteeing admissibility.
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