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On the Stability of Cooperation Structures
Guillaume Haeringer Autonomous University of Barcelona - Department of Economics and Economic History April 2002 FEEM Working Paper No. 20.2002 Abstract: This paper studies the payoff structure of stable cooperation structures in link formation games. Players choose non-cooperatively with whom they want to form a link, and the payoffs are given by the Myerson value of the cooperation structure obtained. We characterize the class of TU-games that ensure the stability of the full cooperation structure, which turns out to be much larger than the class of superadditive TU-games. We then provide an exact characterization of the Moderer and Shapley potential of the link formation game, and establish its equivalence with the potential as defined by Hart and Mas-Colell [Econometrica, 57 (1989), 589-614]. We use this result to show that stable but Pareto dominated graphs can emerge under simple best-response dynamics.
Keywords: Cooperation structure, graph, Myerson value, stability, potential JEL Classifications: C71, C72 Working Paper SeriesDate posted: April 06, 2002 ; Last revised: May 09, 2002Suggested CitationContact Information
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