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Strongly Stable Networks

University of Oregon Economics Working Paper No. 2001-3

28 Pages Posted: 1 Oct 2003  

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute; Canadian Institute for Advanced Research (CIFAR)

Anne van den Nouweland

University of Oregon - Department of Economics

Date Written: November 15, 2002

Abstract

We analyze the formation of networks among individuals. In particular, we examine the existence of networks that are stable against changes in links by any coalition of individuals. We show that to investigate the existence of such strongly stable networks one can restrict focus on a component-wise egalitarian allocation of value. We show that when such strongly stable networks exist they coincide with the set of efficient networks (those maximizing the total productive value). We show that the existence of strongly stable networks is equivalent to core existence in a derived cooperative game and use that result to characterize the class of value functions for which there exist strongly stable networks via a "top convexity" condition on the value function on networks. We also consider a variation on strong stability where players can make side payments, and examine situations where value functions may be non-anonymous - depending on player labels.

Suggested Citation

Jackson, Matthew O. and van den Nouweland, Anne, Strongly Stable Networks (November 15, 2002). University of Oregon Economics Working Paper No. 2001-3. Available at SSRN: https://ssrn.com/abstract=436540 or http://dx.doi.org/10.2139/ssrn.436540

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
1-650-723-3544 (Phone)

HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
United States

Canadian Institute for Advanced Research (CIFAR) ( email )

180 Dundas Street West, Suite 1400
Toronto, Ontario
Canada

Anne Van den Nouweland

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States
541-346-1267 (Phone)
541-346-1243 (Fax)

HOME PAGE: http://pages.uoregon.edu/annev/

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