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Coordination in evolving networks with endogenous decay

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  • Francesco Feri

    ()

  • Miguel Meléndez-Jiménez

    ()

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    Abstract

    This paper studies an evolutionary model of network formation with endogenous decay, in which agents benefit both from direct and indirect connections. In addition to forming (costly) links, agents choose actions for a coordination game that determines the level of decay of each link. We address the issues of coordination (long-run equilibrium selection) and network formation by means of stochastic stability techniques. We find that the long-run behavior of the system depends on a fine interplay of the link cost and the trade-off between efficiency and risk-dominance. Copyright Springer-Verlag Berlin Heidelberg 2013

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    File URL: http://hdl.handle.net/10.1007/s00191-013-0313-9
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Evolutionary Economics.

    Volume (Year): 23 (2013)
    Issue (Month): 5 (November)
    Pages: 955-1000

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    Handle: RePEc:spr:joevec:v:23:y:2013:i:5:p:955-1000

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    Related research

    Keywords: Coordination; Networks; Risk-dominance; Stochastic stability; C72; C73; D83; D85;

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    References

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    Cited by:
    1. Tim Hellmann & Mathias Staudigl, 2012. "Evolution of Social networks," Working Papers 470, Bielefeld University, Center for Mathematical Economics.

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