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Friendship Networks

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  • Jan K. Brueckner

Abstract

This paper develops a model of social networks different from those presented in the recent literature. In contrast to existing models, the level of investment in link formation is a continuous decision variable, and links form stochastically rather than deterministically, with the probability depending on the noncooperative investment choices of both parties. Since the network structure is then stochastic rather than deterministic, the actual pattern of links cannot be specified, as in previous models, with the analysis focusing instead on which links are most likely to form. This alternate approach leads to a much simpler mathematical structure than in previous work. The analysis, which is couched in the context of friendship networks, shows that individual investment in friendship formation is too low. In addition, the analysis shows that, in an asymmetric setting where one individual has personal magnetism or a broad group of acquaintances, friendship links involving this attractive agent are most likely to form. Copyright Blackwell Publishing, Inc. 2006

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 46 (2006)
Issue (Month): 5 ()
Pages: 847-865

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Handle: RePEc:bla:jregsc:v:46:y:2006:i:5:p:847-865

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References

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  1. Matthew O. Jackson & Asher Wolinsky, 1995. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Calvo-Armengol, Antoni & Zenou, Yves, 2005. "Job matching, social network and word-of-mouth communication," Journal of Urban Economics, Elsevier, vol. 57(3), pages 500-522, May.
  4. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
  5. Matthew O. Jackson & Alison Watts, 2000. "On the Formation of Interaction Networks in Social Coordination Games," Econometric Society World Congress 2000 Contributed Papers 0778, Econometric Society.
  6. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
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Citations

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Cited by:
  1. Helsley, Robert W. & Zenou, Yves, 2011. "Social Networks and Interactions in Cities," IZA Discussion Papers 5506, Institute for the Study of Labor (IZA).
  2. Sudipta Sarangi & Aditi Roy, . "Revisiting Friendship Networks," Departmental Working Papers 2009-12, Department of Economics, Louisiana State University.
  3. Bloch, Francis & Dutta, Bhaskar, 2005. "Communication Networks with Endogenous Link Strength," The Warwick Economics Research Paper Series (TWERPS) 723, University of Warwick, Department of Economics.
  4. Joost Vandenbossche & Thomas Demuynck, 2013. "Network Formation with Heterogeneous Agents and Absolute Friction," Computational Economics, Society for Computational Economics, vol. 42(1), pages 23-45, June.
  5. Konovalov, Alexander, 2014. "Competition and Cooperation in Network Games," Working Papers in Economics 583, University of Gothenburg, Department of Economics.
  6. Gilles, R.P. & Sarangi, S., 2004. "Social Network Formation with Consent," Discussion Paper 2004-70, Tilburg University, Center for Economic Research.
  7. Gilles, R.P. & Chakrabarti, S. & Sarangi, S. & Badasyan, N., 2004. "The Role of Middlemen inEfficient and Strongly Pairwise Stable Networks," Discussion Paper 2004-64, Tilburg University, Center for Economic Research.

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