A Noncooperative Model of Contest Network Formation
Résumé
Network structure has a significant role in determining the outcomes of many socioeconomic relationships, including antagonistic ones. In this paper we study a situation in which agents, embedded in a network, simultaneously play interrelated bilateral contest games with their neighbours. Spillovers between contests induce complex local and global network effects. We first characterize the equilibrium of the game on an arbitrary fixed network. Then we study a network formation model, introducing a novel but intuitive link formation protocol. As links represent negative relationships, link formation is unilateral while link destruction is a bilateral action. The unique stable network topology is the complete k-partite network with partitions of different sizes. This model also provides a micro-foundation for the concept of structural balance, and the main results go in line with theoretical and empirical findings from other disciplines, including biology and sociology.
Domaines
Economies et finances
Origine : Fichiers produits par l'(les) auteur(s)