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Cooperation with Externalities and Uncertainty

Habis, Helga LU and Csercsik, David (2015) In Networks and Spatial Economics 15(1). p.1-16
Abstract
We introduce a new solution concept to problems with externalities, which is the first in the literature to take into account economic, regulatory and physical stability aspects of network problems in the very same model. A new class of cooperative games is defined where the worth of a coalition depends on the behavior of other players and on the state of nature as well. We allow for coalitions to form both before and after the resolution of uncertainty, hence agreements must be stable against both types of deviations. The appropriate extension of the classical core concept, the Sustainable Core, is defined for this new setup to test the stability of allocations in such a complex environment. A prominent application, a game of consumers... (More)
We introduce a new solution concept to problems with externalities, which is the first in the literature to take into account economic, regulatory and physical stability aspects of network problems in the very same model. A new class of cooperative games is defined where the worth of a coalition depends on the behavior of other players and on the state of nature as well. We allow for coalitions to form both before and after the resolution of uncertainty, hence agreements must be stable against both types of deviations. The appropriate extension of the classical core concept, the Sustainable Core, is defined for this new setup to test the stability of allocations in such a complex environment. A prominent application, a game of consumers and generators on an electrical energy transmission network is examined in details, where the power in- and outlets of the nodes have to be determined in a way, that if any line instantaneously fails, none of the remaining lines may be overloaded. We show that fulfilling this safety requirement in a mutually acceptable way can be achieved by choosing an element in the Sustainable Core. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Partition function form games, Uncertainty, Core, Sustainability, Networks, Game theory, Externalities
in
Networks and Spatial Economics
volume
15
issue
1
pages
1 - 16
publisher
Springer
external identifiers
  • wos:000352822400001
  • scopus:84928252420
ISSN
1572-9427
DOI
10.1007/s11067-014-9265-3
language
English
LU publication?
yes
id
a61c4ac3-5528-4998-9d9c-c55e2f16c881 (old id 5401774)
date added to LUP
2015-05-19 12:59:52
date last changed
2017-01-01 03:50:45
@article{a61c4ac3-5528-4998-9d9c-c55e2f16c881,
  abstract     = {We introduce a new solution concept to problems with externalities, which is the first in the literature to take into account economic, regulatory and physical stability aspects of network problems in the very same model. A new class of cooperative games is defined where the worth of a coalition depends on the behavior of other players and on the state of nature as well. We allow for coalitions to form both before and after the resolution of uncertainty, hence agreements must be stable against both types of deviations. The appropriate extension of the classical core concept, the Sustainable Core, is defined for this new setup to test the stability of allocations in such a complex environment. A prominent application, a game of consumers and generators on an electrical energy transmission network is examined in details, where the power in- and outlets of the nodes have to be determined in a way, that if any line instantaneously fails, none of the remaining lines may be overloaded. We show that fulfilling this safety requirement in a mutually acceptable way can be achieved by choosing an element in the Sustainable Core.},
  author       = {Habis, Helga and Csercsik, David},
  issn         = {1572-9427},
  keyword      = {Partition function form games,Uncertainty,Core,Sustainability,Networks,Game theory,Externalities},
  language     = {eng},
  number       = {1},
  pages        = {1--16},
  publisher    = {Springer},
  series       = {Networks and Spatial Economics},
  title        = {Cooperation with Externalities and Uncertainty},
  url          = {http://dx.doi.org/10.1007/s11067-014-9265-3},
  volume       = {15},
  year         = {2015},
}