Affordable Access

A BARGAINING APPROACH TO COORDINATION IN NETWORKS

Authors
Disciplines
  • Mathematics

Abstract

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 coordination 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 results from bargaining. We analyze the model both in a static and a dynamic setting. Whereas the static game has multiplicity of equilibria, we show that only one is stochastically stable.

There are no comments yet on this publication. Be the first to share your thoughts.