Myopic or Farsighted ? An Experiment on Network Formation Georg KIRCHSTEIGER

NOTA DI LAVORO 45 . 2011 Myopic or Farsighted ?

Limited Farsightedness in Network Formation

Pairwise stability Jackson and Wolinsky [1996] is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are perfectly farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these extreme theories,...

Farsighted free trade networks

The paper examines the strategic stability and the e¢ ciency of free trade networks. We reconsider the endogenous tari¤ model introduced by Goyal and Joshi (2006). Di¤erent from their analysis with myopic countries, we adopt a new solution concept, pairwise farsighted stable set (Herings, Mauleon and Vannetelbosch, 2009, GEB), to examine the formation of free trade agreements (FTAs) as a networ...

Club Formation Games with Farsighted Agents

Modeling club structures as bipartite networks, we formulate the problem of club formation as a game of network formation and identify those club networks that are stable if agents behave farsightedly in choosing their club memberships. Using the farsighted core as our stability notion, we show that if agents’ payoffs are single-peaked and agents agree on the peak club size (i.e., agents agree ...

Risk-sharing networks and farsighted stability

Evidences suggest that in some villages of developing countries, agents rely on mutual insurance agreements to deal with income or expenditure shocks. In this paper we analyze which risk-sharing networks can be sustained in the long run when individuals are farsighted rather than myopic, in the sense that they are able to forecast how other agents would react to their actions. In particular, we...