Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296390 
Year of Publication: 
2022
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 17 [Issue:] 4 [Year:] 2022 [Pages:] 1473-1499
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
Economic agents care about their relative well-being, and the comparisons are usually local. We capture this using a network model, in which an agent's payoff depends on the ranking of their allocation among their network neighbors’. Given a network, an allocation is called α-stable if no blocking coalition whose size is an α fraction of the population can strictly improve their payoffs. We find a sufficient and necessary condition for a network to permit an α-stable allocation: the network has an independent set whose size is at least 1−α of the network population. The characterization of permissive networks holds not only for our baseline ranking preference but also for a range of preferences under which the sets of stable allocations are expanded. We also provide a sufficient condition for an allocation to be stable. Extensions of the model concern directed networks and the case where agents have limited enforcement power.
Subjects: 
independent set
Network
relative comparison
social ranking
stable allocations
JEL: 
D85
D91
D72
C71
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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