Template-Type: ReDIF-Paper 1.0
Author-Name: Francis Bloch
Author-Name-First: Francis
Author-Name-Last: Bloch
Author-Email: francis.bloch@univ-paris1.fr
Author-Workplace-Name: Université Paris 1 and Paris School of Economics
Author-Name: Bhaskar Dutta
Author-Name-First: Bhaskar
Author-Name-Last: Dutta
Author-Email: b.dutta@warwick.ac.uk
Author-Workplace-Name: University of Warwick and Department of Economics, Ashoka University
Author-Name: Mihai Manea
Author-Name-First: Mihai
Author-Name-Last: Manea
Author-Email: mihai.manea@stonybrook.edu
Author-Workplace-Name: Stony Brook University
Title: Efficient Partnership Formation In Networks
Abstract: We analyze the formation of partnerships in social networks. Players need favors at random times and ask their neighbors in the network to form exclusive long-term partnerships that guarantee reciprocal favor exchange. Refusing to provide a favor results in the automatic removal of the underlying link. Players agree to provide the first favor in a partnership only if they otherwise face the risk of eventual isolation. In equilibrium, players essential for realizing every maximum matching can avoid this risk and enjoy higher payoffsthaninessentialplayers.Althoughthesearchforpartnersisdecentralizedandreflects local partnership opportunities, the strength of essential players drives efficient partnership formation in every network. Equilibrium behavior is determined by the classification of nodes in the Gallai-Edmonds decomposition of the underlying network.
length: 35
Creation-Date: 20180202
Revision-Date: 
Publication-Status: 
File-URL: https://dp.ashoka.edu.in/ash/wpaper/paper09_0.pdf
File-Format: Application/pdf 
Number: 09
Keywords: decentralized markets
Keywords: efficiency
Keywords: favor exchange
Keywords: Gallai-Edmonds decomposition
Keywords: maximum matchings
Keywords: networks
Keywords: partnerships
Keywords: under-demanded.
Handle: RePEc:ash:wpaper:09