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Nestedness in networks: A theoretical model and some applications

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Author Info

  • Zenou, Yves

    ()
    (Department of Economics, Stockholm University)

  • König, Michael D.

    ()
    (Department of Economics, University of Zurich)

  • Tessone, Claudio J.

    ()
    (Department of Management, Technology, and Economics, ETH Zurich)

Abstract

We develop a dynamic network formation model that can explain the observed nestedness in real-world networks. Links are formed on the basis of agents' centrality and have an exponentially distributed life time. We use stochastic stability to identify the networks to which the network formation process converges and find that they are nested split graphs. We completely determine the topological properties of the stochastically stable networks and show that they match features exhibited by real-world networks. Using four different network datasets, we empirically test our model and show that it fits well the observed networks.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): (Forthcoming)
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Handle: RePEc:the:publsh:1348

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Related research

Keywords: Nestedness; Bonacich centrality; network formation; nested split graphs;

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References

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Cited by:
  1. Helsley, Robert & Zenou, Yves, 2011. "Social Networks and Interactions in Cities," Research Papers in Economics 2011:8, Stockholm University, Department of Economics.

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