Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74247
Authors: 
Calvó-Armengol, Antoni
Ilkiliç, Rahmi
Year of Publication: 
2005
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 34.2005
Abstract: 
Suppose that individual payoffs depend on the network connecting them. Consider the following simultaneous move game of network formation: players announce independently the links they wish to form, and links are formed only under mutual consent. We provide necessary and sufficient conditions on the network link marginal payoffs such that the set of pairwise stable, pairwise-Nash and proper equilibrium networks coincide, where pairwise stable networks are robust to one-link deviations, while pairwise-Nash networks are robust to one-link creation but multi-link severance. Under these conditions, proper equilibria in pure strategies are fully characterized by one-link deviation checks.
Subjects: 
Network formation
Pairwise-stability
Proper equilibrium
JEL: 
C62
C72
D85
L14
Document Type: 
Working Paper

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