Stable and metastable contract networks

Abstract

We consider a hypergraph (I,C), with possible multiple (hyper)edges and loops, in which the vertices $i\in I$ are interpreted as agents, and the edges $c\in C$ as contracts that can be concluded between agents. The preferences of each agent i concerning the contracts where i takes part are given by use of a choice function $f_i$ possessing the so-called path independent property. In this general setup we introduce the notion of stable network of contracts. The paper contains two main results. The first one is that a general problem on stable systems of contracts for (I,C,f) is reduced to a set of special ones in which preferences of agents are described by use of so-called weak orders, or utility functions. However, for a special case of this sort, the stability may not exist. Trying to overcome this trouble when dealing with such special cases, we introduce a weaker notion of metastability for systems of contracts. Our second result is that a metastable system always exists.