A one-stage model of link formation and payoff division

In this paper we introduce a strategic form model in which cooperation stru ctures and divisions of the payoffs are determined simultaneously. We analy ze the cooperation structures and payoff divisions that result according to Nash equilibria, strong Nash equilibria, and coalition proof Nash equilibr ia. We find that no cycle will be formed if a player claims a positive amou nt for the formation of one of its links and that a player does not necessa rily profit from a central position in a cooperation structure. (C) 2001 Ac ademic Press.