<p>This paper is concerned with the selection and computation of perfect pairwise stable networks, introduced in Bich and Teteryatnikova (<CitationRef CitationID="CR4">2023</CitationRef>) as a refined notion of pairwise stable networks. We reformulate the concept of perfect pairwise stability as a trembling-hand perfect equilibrium of a non-cooperative game played by the links in the network. We adapt a variant of linear tracing procedure for non-cooperative games to the network formation game. We apply the algorithm to several models in the literature and obtain a number of novel insights.</p>

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Computing Perfect Pairwise Stable Networks

  • Caihua Chen,
  • Peixuan Li,
  • Junhao Tao,
  • Yang Zhan

摘要

This paper is concerned with the selection and computation of perfect pairwise stable networks, introduced in Bich and Teteryatnikova (2023) as a refined notion of pairwise stable networks. We reformulate the concept of perfect pairwise stability as a trembling-hand perfect equilibrium of a non-cooperative game played by the links in the network. We adapt a variant of linear tracing procedure for non-cooperative games to the network formation game. We apply the algorithm to several models in the literature and obtain a number of novel insights.