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Efficient partnership formation in networks
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Bloch, Francis, Dutta, Bhaskar and Manea, Mihai (2019) Efficient partnership formation in networks. Theoretical Economics, 14 (3). pp. 779-811. doi:10.3982/TE3453 ISSN 1933-6837.
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Official URL: https://doi.org/10.3982/TE3453
Abstract
We analyze the formation of partnerships in social networks. Players need favors at random times and ask their neighbors in the network to form exclusive long-term partnerships that guarantee reciprocal favor exchange. Refusing to provide a favor results in the automatic removal of the underlying link. Players agree to provide the first favor in a partnership only if they otherwise face the risk of eventual isolation. In equilibrium, players essential for realizing every maximum matching can avoid this risk and enjoy higher payoffs than in essential players. Although the search for partners is decentralized and reflects local partnership opportunities, the strength of essential players drives efficient partnership formation in every network. Equilibrium behavior is determined by the classification of nodes in the Gallai-Edmonds decomposition of the underlying network.
Item Type: | Journal Article | ||||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||
Library of Congress Subject Headings (LCSH): | Game theory, Social networks -- Mathematical models | ||||||
Journal or Publication Title: | Theoretical Economics | ||||||
Publisher: | Econometric Society | ||||||
ISSN: | 1933-6837 | ||||||
Official Date: | July 2019 | ||||||
Dates: |
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Volume: | 14 | ||||||
Number: | 3 | ||||||
Page Range: | pp. 779-811 | ||||||
DOI: | 10.3982/TE3453 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Date of first compliant deposit: | 31 January 2019 | ||||||
Date of first compliant Open Access: | 1 February 2019 | ||||||
RIOXX Funder/Project Grant: |
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