dc.contributor.author | Arnold, Tone | |
dc.contributor.author | Wooders, Myrna | |
dc.date.accessioned | 2020-09-13T21:32:29Z | |
dc.date.available | 2020-09-13T21:32:29Z | |
dc.date.issued | 2005 | |
dc.identifier.uri | http://hdl.handle.net/1803/15783 | |
dc.description.abstract | We present a dynamic model of club formation in a society of identical people. Coalitions consisting of members of the same club can form for one period and coalition members can jointly deviate. The dynamic process is described by a Markov chain defined by myopic optimization on the part of coalitions. We define a Nash club equilibrium (NCE) as a strategy profile that is immune to such coalitional deviations. For single--peaked preferences, we show that, if one exists, the process will converge to a NCE profile with probability one. NCE is unique up to a renaming of players and locations. Further, NCE corresponds to strong Nash equilibrium in the club formation game. Finally, we deal with the case where NCE fails to exist due to a nonbalancedness problem. When the population size is not an integer multiple of an optimal club size, there may be 'left over' players who prevent the process from `settling down'. To treat this case, we define the concept of k-remainder NCE, which requires that all but k players are playing a Nash club equilibrium, where k is defined by the minimal number of left over players. We show that the process converges to an ergodic NCE, that is, a set of states consisting only of k-remainder NCE. | |
dc.language.iso | en_US | |
dc.publisher | Vanderbilt University | en |
dc.subject | Club formation | |
dc.subject | cooperation | |
dc.subject | best-reply dynamics | |
dc.subject | Nash club equilibrium | |
dc.subject | ergodic Nash club equilibrium | |
dc.subject | JEL Classification Number: C72 | |
dc.subject | JEL Classification Number: C73 | |
dc.subject | JEL Classification Number: D62 | |
dc.subject | JEL Classification Number: D71 | |
dc.subject.other | | |
dc.title | Dynamic Club Formation with Coordination | |
dc.type | Working Paper | en |
dc.description.department | Economics | |