Introductory Workshop: Mathematics and Computer Science of Market and Mechanism Design: "Stability in Trading Networks"
Presenter
September 14, 2023
Keywords:
- market design
- mechanism design
- auctions
- matching
- approximation
- equilibrium analysis
- algorithmic game theory
- complexity
- economic theory
- discrete optimization
- graph theory
- mathematical programming
Abstract
We consider a model of matching in trading networks in which firms can enter into bilateral contracts. In trading networks, stable outcomes, which are immune to deviations of arbitrary sets of firms, may not exist. We define a solution concept called trail-stability. Trail-stable outcomes are immune to consecutive, pairwise deviations between linked firms. We show that any trading network with bilateral contracts has a trail-stable outcome whenever firms’ choice functions satisfy the full substitutability condition.