Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/113955
Authors: 
Lee, Joosung
Year of Publication: 
2015
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 53.2015
Abstract: 
We introduce a noncooperative multilateral bargaining model for a network-restricted environment, in which players can communicate only with their neighbors. Each player strategically chooses the bargaining partners among the neighbors to buy out their communication links with upfront transfers. The main theorem characterizes a condition on network structures for efficient equilibria and shows the prevalence of strategic delays. If the underlying network is either complete or circular, then an efficient stationary subgame perfect equilibrium exists for all discount factors: all the players always try to reach an agreement as soon as practicable and hence no strategic delay occurs. In any other network, however, an efficient equilibrium is impossible for sufficiently high discount factors because some players strategically delay an agreement. We also provide an example of a Braess-like paradox, in which the more links are available, the less links are actually used. Thus, network improvements may decrease social welfare.
Subjects: 
Noncooperative Bargaining
Coalition Formation
Communication Restriction
Buyout
Network
Braess's Paradox
JEL: 
C72
C78
D72
D74
D85
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.