Template-type: ReDif-Paper 1.0
Author-Name: Herings P. Jean-Jacques 
Author-Name: Mauleon Ana 
Author-Name: Vannetelbosch Vincent 
Author-workplace-name: METEOR
Title: Farsightedly Stable Networks
Abstract: We propose a new concept, the pairwise farsightedly stable set, in order to predict which networks may be formed among farsighted players. A set of networks G is pairwise  farsightedly stable (i) if all possible pairwise deviations from any network g ∈ G to a network outside G are deterred by the threat of ending worse off or equally well off, (ii) if there exists a farsightedly improving path from any network outside the set leading to some network in the set, and (iii) if there is no proper subset of G satisfying (i) and (ii). We show that a non-empty pairwise farsightedly stable set always exists and we provide a full characterization of unique pairwise farsightedly stable sets of networks. Contrary to other pairwise concepts, pairwise farsighted stability yields a Pareto dominating network, if it exists, as the unique outcome. Finally, we study the relationship between pairwise farsighted stability and other concepts such as the largest consistent set.
Keywords: Economics ; 
Series: Research Memoranda
Creation-Date: 2006
Number: 041
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:a2f206ff-6a1c-4936-b557-0d963d64e1f7/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 292487
Handle: RePEc:unm:umamet:2006041