Stability of Networks under Horizon-K Farsightedness
(2019) Economic Theory — Vol. 68, p. 177-201 (2019)
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- Abstract
- We introduce the concept of a horizon-K farsighted set to study the influence of the degree of farsightedness on network stability. The concept generalizes existing concepts where all players are either fully myopic or fully farsighted. We show that a horizon-K farsighted set always exists and that the horizon-1 farsighted set G₁ is always unique. For generic allocation rules, the set G₁ always contains a horizon-K farsighted set for any K. We provide easy to verify conditions for a set of networks to be a horizon-K farsighted set and we consider the efficiency of networks in horizon-K farsighted sets. We discuss the effects of players with different horizons in an example of criminal networks.
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Jean-Jacques Herings, Mauleon, A., & Vannetelbosch, V. (2019). Stability of Networks under Horizon-K Farsightedness. Economic Theory, 68, 177-201. https://doi.org/10.1007/s00199-018-1119-7 (Original work published 2019)