UQ Seminar in Economic Theory - Australian Centre for Complex Systems -
Evolution of Economic Systems Project

Assoc. Prof. Anne van den Nouweland, University of Oregon, will talk on:

Network formation models with costs for establishing links

Venue:room 112, Colin Clark Building

Date and Time: 1.00pm Monday July 26 2004

Abstract:

In this paper we study endogenous formation of communication networks in
situations where the economic possibilities of groups of players can be
described by a cooperative game. We concentrate on the influence that
the existence of costs for establishing communication links has on the
communication networks that are formed. The starting points in this
paper are two game-theoretic models of the formation of communication
links that were studied in the literature fairly recently, the
extensive-form model by Aumann and Myerson (1988) and the strategic-form
model that was studied by Dutta et al. (1998). We follow their analyses
as closely as possible and use an extension of the Myerson value to
determine the payoffs to the players in communication situations when
forming links is not costless. We find that it is possible that as the
costs of establishing links increase, more links are formed.