Two-stage network games modeling the Belt and Road Initiative

Abstract

Inspired by the Belt and Road Initiative, we introduce a model of two-stage network games, when players first form a directed network (the first stage) and then they may reconsider the actions made at the first stage and choose controls to influence other players in a positive or negative way (the second stage). At both stages players get their payoffs. Considering a cooperative version of the game, we examine the problem of subgame network consistency and design an imputation distribution procedure as a new system of stage payments to guarantee the long-term cooperation. The Shapley value with exogenous directed graph constraint is used as a cooperative solution concept. Finally, we prove that a cooperative subgame is convex which ensures the non-emptiness of the core.