Strategic support of cooperation in dynamic games on networks

Abstract

The paper studies the problem of strategically supported cooperation in dynamic games on networks which initial stage is a network formation stage. Assuming that players behave cooperatively, the dynamic Shapley value is taken as a solution of the game. Due to time inconsistency of the solution, the allocation is realized with the use of an imputation distribution procedure. We provide conditions when the cooperative behavior resulting in the dynamic Shapley value can be supported by a Nash equilibrium. Our theory is also adopted for repeated games which is a special class of dynamic games.