A bargaining approach to coordination in networks (Q956589)
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English | A bargaining approach to coordination in networks |
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A bargaining approach to coordination in networks (English)
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25 November 2008
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This paper presents a model in which players interact via the formation of costly links and the benefits of bilateral interactions are determined by a stag-hunt game. A novel contribution of this paper is that the fraction of the cost borne by each player involved in a bilateral link is not fixed exogenously, but from bargaining. The model analyses both in a static and in a dynamic setting. Whereas the static game has multiplicity of equilibria, the paper shows that the only one is stochastically stable.
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coordination
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Nash bargaining solution
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risk-dominance
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stochastic stability
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