Effrosyni Diamantoudi

Stable International Environmental Agreements: An Analytical Approach

In this paper we examine the formation of international environmental agreements (IEAs). We show that the welfare of the signatories does not increase monotonically with respect to the number of signatories. We provide an analytical solution of the leadership model. In particular, we find that if the number of countries is greater than four then there exists a unique stable IEA with either two, three, or four signatories. Furthermore, we show that the welfare of the signatories is almost at its lowest level when the IEA is stable. While in our model each countrys choice variable is emissions, we extend our results to the case where the choice variable is abatement efforts.

Random paths to stability in the roommate problem

This paper studies whether a sequence of myopic blockings leads to a stable matching in the roommate problem. We prove that if a stable matching exists and preferences are strict, then for any unstable matching, there exists a finite sequence of successive myopic blockings leading to a stable matching. This implies that, starting from any unstable matching, the process of allowing a randomly chosen blocking pair to form converges to a stable matching with probability one. This result generalizes those of Roth and Vande Vate [Econometrica 58 (1990) 1475] and Chung [Games Econ. Behav. 33 (2000) 206] under strict preferences.

Noncooperative formation of coalitions in hedonic games

We study a bargaining procedure of coalition formation in the class of hedonic games, where players’ preferences depend solely on the coalition they belong to. We provide an example of nonexistence of a pure strategy stationary perfect equilibrium, and a necessary and sufficient condition for existence. We show that when the game is totally stable (the game and all its restrictions have a nonempty core), there always exists a no-delay equilibrium generating core outcomes. Other equilibria exhibiting delay or resulting in unstable outcomes can also exist. If the core of the hedonic game and its restrictions always consist of a single point, we show that the bargaining game admits a unique stationary perfect equilibrium, resulting in the immediate formation of the core coalition structure.

Decentralized matching: The role of commitment

The two-sided matching literature has focused on static and centralized games. However, in many markets, the matching is determined in decentralized fashion and continues to change. This paper considers infinitely-repeated matching games, where firms whose positions become vacant make offers to workers, who then decide which offers to accept and the game continues. We study how the stationary-equilibrium outcome depends on whether players commit to their employment relationships. We show that, without commitment from either side of the market (i.e., each contract expires in a period), the equilibrium matching is stable in all periods. With one-sided commitment (where firms offer tenured jobs) or two-sided commitment, the final matching may be unstable. With one-sided commitment, the final matching may be one where all workers are worse off and all firms are better off than in every stable matching, implying that the workers are made worse off by job protection.