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The Formation of Networks with Transfers Among Players

Bloch, Francis and Jackson, Matthew O. (2004) The Formation of Networks with Transfers Among Players. Social Science Working Paper, 1194. California Institute of Technology , Pasadena, CA. (Unpublished)

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We examine the formation of networks among a set of players whose payoffs depend on the structure of the network. We focus on games where players may bargain by promising or demanding transfer payments when forming links. We examine several variations of the transfer/bargaining aspect of link formation. One aspect is whether players can only make and receive transfers to other players to whom they are directly linked, or whether they can also subsidize links that they are not directly involved in. Another aspect is whether or not transfers related to a given link can be made contingent on the full resulting network or only on the link itself. A final aspect is whether or not players can pay other players to refrain from forming links. We characterize the networks that are supported under these variations and show how each of the above aspects is related either to accounting for a specific type of externality, or to dealing with the combinatorial nature of network payoffs.

Item Type:Report or Paper (Working Paper)
Related URLs:
URLURL TypeDescription ItemPublished Version
Jackson, Matthew O.0000-0001-9846-4249
Additional Information:Financial support from the Lee Center for Advanced Networking and from the NSF under grant SES-0316493 is gratefully acknowledged. We thank Anke Gerber and the participants of the Ninth Coalition Theory Network Workshop for a helpful discussion of the paper, and Toni Calvo-Armengol for comments on an earlier draft. Published as Bloch, F., & Jackson, M.O. (2007). The formation of networks with transfers among players. Journal of Economic Theory, 133(1), 83-110.
Group:Social Science Working Papers
Funding AgencyGrant Number
Caltech Lee Center for Advanced NetworkingUNSPECIFIED
Subject Keywords:Networks, Network Games, Network Formation, Game Theory, Efficient Networks, Side Payments, Transfers, Bargaining, Externalities
Series Name:Social Science Working Paper
Issue or Number:1194
Classification Code:JEL: A14, C71, C72
Record Number:CaltechAUTHORS:20170731-140304247
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79611
Deposited By: Jacquelyn Bussone
Deposited On:01 Aug 2017 23:08
Last Modified:03 Oct 2019 18:21

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