original papers : The stability and efficiency of directed communication networks
AbstractThis paper analyzes the formation of directed networks where self-interested individuals choose with whom they communicate. The focus of the paper is on whether the incentives of individuals to add or sever links will lead them to form networks that are efficient from a societal viewpoint. It is shown that for some contexts, to reconcile efficiency with individual incentives, benefits must either be redistributed in ways depending on "outsiders" who do not contribute to the productive value of the network, or in ways that violate equity (i.e., anonymity). It is also shown that there are interesting contexts for which it is possible to ensure that efficient networks are individually stable via (re)distributions that are balanced across components of the network, anonymous, and independent of the connections of non-contributing outsiders.
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Bibliographic InfoArticle provided by Springer in its journal Review of Economic Design.
Volume (Year): 5 (2000)
Issue (Month): 3 ()
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Web page: http://link.springer.de/link/service/journals/10058/index.htm
Find related papers by JEL classification:
- A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
- D20 - Microeconomics - - Production and Organizations - - - General
- J00 - Labor and Demographic Economics - - General - - - General
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- Matthew O. Jackson, 2001.
"Strongly Stable Networks,"
University of Oregon Economics Department Working Papers
2001-3, University of Oregon Economics Department, revised 15 Nov 2002.
- Jackson, Matthew O., 1998.
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- Andrea Galeotti & Sanjeev Goyal & Jurjen Kamphorst, 2003.
"Network Formation with Heterogeneous Players,"
Economics Discussion Papers
562, University of Essex, Department of Economics.
- Georgios Chasparis & Jeff Shamma, 2012. "Distributed Dynamic Reinforcement of Efficient Outcomes in Multiagent Coordination and Network Formation," Dynamic Games and Applications, Springer, vol. 2(1), pages 18-50, March.
- Slikker, Marco & Gilles, Robert P. & Norde, Henk & Tijs, Stef, 2005. "Directed networks, allocation properties and hierarchy formation," Mathematical Social Sciences, Elsevier, vol. 49(1), pages 55-80, January.
- McBride, Michael, 2006. "Imperfect monitoring in communication networks," Journal of Economic Theory, Elsevier, vol. 126(1), pages 97-119, January.
- Thayer Morrill, 2011. "Network formation under negative degree-based externalities," International Journal of Game Theory, Springer, vol. 40(2), pages 367-385, May.
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