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Communication network formation with link specificity and value transferability

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  • Harmsen - van Hout, Marjolein J.W.
  • Herings, P. Jean-Jacques
  • Dellaert, Benedict G.C.

Abstract

We model strategic communication network formation with (i) link specificity: link maintenance lowers specific attention and thus value (negative externality previously ignored for communication) and (ii) value transferability via indirect links for informational but not for social value (positive externality modeled uniformly before). Assuming only social value, the pairwise stable set includes many nonstandard networks under high and particular combinations of complete components under low link specificity. Allowing for social and informational value reduces this set to certain fragmented networks under high and the complete network under low link specificity. These extremes are efficient, whereas intermediate link specificity generates inefficiency.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Operational Research.

Volume (Year): 229 (2013)
Issue (Month): 1 ()
Pages: 199-211

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Handle: RePEc:eee:ejores:v:229:y:2013:i:1:p:199-211

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Web page: http://www.elsevier.com/locate/eor

Related research

Keywords: Bilateral communication links; Link specificity; Value transferability; Social vs. informational value; Strategic network formation;

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