Abstract
Group formation tends to involve peer effects. In the presence of such complementarities, however, coalitional games need not have a nonempty core. With a restricted preference structure, I provide new sufficient conditions for the nonemptiness of the core of network games that involve pairwise complementarities between peers. The conditions are twofold: (a) sign-consistency—all agents agree on the sign of the value of any link—and (b) sign-balance—the enemy of my enemy is my friend. My conditions provide a game-theoretic explanation for the longevity of the dichotomy of political alliances in the contemporary world.
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This project was funded by Mack Institute Research Grants at the Wharton School of the University of Pennsylvania and was supported by JSPS KAKENHI Grant Number 20K22118.
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This paper was previously circulated as “The Enemy of My Enemy Is My Friend: New Conditions for Two-sided Matching.” The previous version studied two-sided matching games, while this version studies a network game. I thank Rakesh Vohra for guidance and instruction in this work. I also thank Eduardo Azevedo, Markos Epitropou, George Mailath, and Juuso Toikka for their comments and guidance, and thank seminar audiences for useful feedback. This project was funded by Mack Institute Research Grants at the Wharton School of the University of Pennsylvania and was supported by JSPS KAKENHI Grant Number 20K22118.
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Koizumi, H. The enemy of my enemy is my friend: new conditions for network games. Econ Theory Bull 11, 223–233 (2023). https://doi.org/10.1007/s40505-023-00253-7
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DOI: https://doi.org/10.1007/s40505-023-00253-7