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Article

Cautious Farsighted Stability in Network Formation Games with Streams of Payoffs

We propose a new notion of farsighted pairwise stability for dynamic network formation
which includes two notable features: consideration of intermediate payoffs and cautiousness.
This differs from existing concepts which typically consider either only immediate or final
payoffs, and which often require that players are optimistic in any environment without full
communication and commitment. For arbitrary (and possibly heterogeneous) preferences over
the process of network formation, a non-empty cautious path stable (CPS) set of networks
always exists. Furthermore, some general relationships exist between CPS and other farsighted
concepts.