A competitive partnership formation process

Research output: Contribution to journalArticle

Author(s)

  • Tommy Andersson
  • Jens Gudmundsson
  • Dolf Talman
  • Zaifu Yang

Department/unit(s)

Publication details

JournalGames and Economic Behaviour
DatePublished - Jul 2014
Volume86
Number of pages13
Pages (from-to)165-177
Original languageEnglish

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.

    Research areas

  • partnership formation, mechanism design, equilibrium, stability, assignment market

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