The Evolution of Networks and Local Public Good Provision: A Potential Approach

Games

Markus Kinateder¹  Luca Paolo Merlino² 

[1] Departamento de Economía, Edificio Amigos, Universidad de Navarra, 31009 Pamplona, Spain;Department of Economics, University of Antwerp, Prinsstraat 13, 2000 Antwerp, Belgium;

关键词: network formation;    network games;    public goods;    potential games;   

DOI  :  10.3390/g12030055

来源: DOAJ

【 摘 要 】

In this paper, we propose a game in which each player decides with whom to establish a costly connection and how much local public good is provided when benefits are shared among neighbors. We show that, when agents are homogeneous, Nash equilibrium networks are nested split graphs. Additionally, we show that the game is a potential game, even when we introduce heterogeneity along several dimensions. Using this result, we introduce stochastic best reply dynamics and show that this admits a unique and stationary steady state distribution expressed in terms of the potential function of the game. Hence, even if the set of Nash equilibria is potentially very large, the long run predictions are sharp.

【 授权许可】

Unknown