A characterization of cooperation in dynamic network games

Abstract

This paper explores conditions under which players cooperate in a dynamic network game. Historically, folk theorems have provided a speckled perspective by showing that there exists equilibria where players cooperate, do not cooperate, as well as a myriad of equilibria between these extremes. Our main contribution is identifying a necessary and sufficient equilibrium refinement such that, for all equilibria, all players cooperate in order to reach a strictly Pareto dominant graph. We base our results on a class of games that subsume forward-looking extensions of exchange economies with indivisible goods.