A competitive partnership formation process

T. Andersson, J. Gudmundsson, A.J.J. Talman, Z. Yang

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)

Abstract

A group of heterogeneous agents may form partnerships in pairs. All single agents as well as all partnerships generate values. If two agents choose to cooperate, they need to specify how to split their joint value among one another. In equilibrium, which may or may not exist, no agents have incentives to break up any existing partnerships or form new partnerships. This paper proposes a dynamic competitive adjustment process that always either finds an equilibrium or exclusively disproves the existence of any equilibrium in finitely many steps. When an equilibrium exists, partnership and revenue distribution will be automatically and endogenously determined by the process. Moreover, several fundamental properties of the equilibrium solution and the model are derived.
Original languageEnglish
Pages (from-to)165-177
JournalGames and Economic Behavior
Volume86
Issue numberJuly 2014
DOIs
Publication statusPublished - Jul 2014

Keywords

  • partnership information
  • adjustment process
  • equilibrium
  • assignment market

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