Abstract:

Firstly, by establishing equivalent condition of pairwise stability networks with Jackson-Wolinsky rules, this paper gives an complete algorithm to find pairwise stability network. Secondly, after the introduction of side payments, this paper proofs that the set of pairwise stability network allowing for side payments when adding links is the intersection of the set of pairwise stability network and the set of pairwise stability network allowing for side payments when adding and deleting links. Finally, two explicit pairwise stability network models are considered. Using the algorithm of pairwise stability networks, this paper systematically analyzes this two models’ pairwise stability.

Key words: network game, Jackson-Wolinsky rules, pairwise stability, side payments