Netflix Games: Local Public Goods with Capacity Constraints

Joint with: Stefanie Gerke, Gregory Gutin, Sung-Ha Hwang.

Abstract: This paper considers incentives to provide goods that are partially excludable
along social links. Individuals face a capacity constraint in that, conditional upon
providing, they may nominate only a subset of neighbours as co-beneficiaries.
Our model has two typically incompatible ingredients: (i) a graphical game (in-
dividuals decide how much of the good to provide), and (ii) graph formation
(individuals decide which subset of neighbours to nominate as co-beneficiaries).
For any capacity constraints and any graph, we show the existence of specialised
pure strategy Nash equilibria - those in which some individuals (the ‘Drivers’, D)
contribute while the remaining individuals (the ‘Passengers’, P) free ride. The
proof is constructive and corresponds to showing, for a given capacity, the exis-
tence of a new kind of spanning bipartite subgraph, a DP-subgraph, with partite
sets D and P. We consider how the number of Drivers in equilibrium changes
as the capacity constraints are relaxed and show a weak monotonicity result. Fi-
nally, we introduce dynamics and show that only specialised equilibria are stable
against individuals unilaterally changing their provision level.

https://sites.google.com/site/prneary/

Schedule (Israel time):

11:30-11:45 free talk

11:45-12:45 - research presentation

To view the seminar recording, click here.