Graph formation effects on social welfare and inequality in a networked resource game

Abstract

We introduce the Networked Resource Game, a graphical game where players' actions are a set of resources that they can apply over links in a graph to form partnerships that yield rewards. This introduces a new constraint on actions over multiple links. We investigate several network formation algorithms and find bilateral coalition-proof equilibria for these games. We analyze the outcomes in terms of social welfare and inequality, as measured by the Gini coefficient, and show how graph formation affects these aspects of a networked economy. © 2013 Springer-Verlag.