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Local Farsightedness in Network Formation
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Local Farsightedness in Network Formation

Author

Listed:
  • de Callatay, Pierre

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

  • Mauleon, Ana

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

  • Vannetelbosch, Vincent

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

Abstract

We propose the concept of local-k farsighted consistent network for analysing network formation games where players only consider a limited number of feasible networks. A network g is said to be local-k farsightedly consistent if, for any network g' within the distance-k neighbourhood of g, either g is not defeated by g' , or g defeats g' . We show that if the utility function is (componentwise) egalitarian or satisfies reversibility or excludes externalities across components, then local-k farsightedness is more likely to be a good proxy for what would happen when players have full knowledge of all feasible networks.

Suggested Citation

  • de Callatay, Pierre & Mauleon, Ana & Vannetelbosch, Vincent, 2023. "Local Farsightedness in Network Formation," LIDAM Discussion Papers CORE 2023003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2023003
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Networks ; local farsightedness ; stability;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General

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