A large portion of our economic interactions involves a very small portion of the population. We seem to prefer familiar venues. But the tendency to focus our attention on a few individuals or activities is an attribute that is typically omitted in our characterization of markets. In markets agents seem to interact impersonally and efficiently with countless other faceless agents. This chapter looks into the consequences of including a connection between agents, a tendency to interact with a specific few, in economic decision making. Agents are assumed to occupy the nodes of a network and to interact exclusively with agents to whom they are directly linked. We then study evolution of game strategies and the effectiveness of exchange as the topology of the underlying network is altered. We find that networks matter, that changes in a network's structure can alter the steady-state attributes of an artificial society as well as the dynamics of that system.
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ReDIF This chapter was published in: Leigh Tesfatsion & Kenneth L. Judd (ed.) Handbook of Computational Economics, , chapter 20, pages 1013-1045, 2006.
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Related research
This chapter was published in the following book, which is listed on IDEAS: Leigh Tesfatsion & Kenneth L. Judd (ed.), 2006.
"Handbook of Computational Economics,"
Handbook of Computational Economics,
Elsevier,
edition 1, volume 2, number 2, September.
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