We consider network formation games by Jackson and Wolinsky (J Econ Theory 71:44–74, 1996) and characterize the class of games that have a network potential. We show that there exists… Click to show full abstract
We consider network formation games by Jackson and Wolinsky (J Econ Theory 71:44–74, 1996) and characterize the class of games that have a network potential. We show that there exists a network potential if and only if each player’s payoff function can be represented as the Shapley value of a special class of cooperative games indexed by the networks. We also show that a network potential coincides with a potential of the same class of cooperative games.
               
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