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The Stability of Exchange Networks

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  • Dooan, Gonul
  • van Assen, M.A.L.M.
  • van de Rijt, Arnout
  • Buskens, Vincent

Abstract

This paper develops a formal model of exchange network stability that combines expected value theory (Friedkin 1995) with the economic literature on network dynamics. We identify stable networks up to size 8 for varying costs and investigate whether they are Pareto efficient and egalitarian. Only a very small number of networks are stable. Odd cycles and networks consisting of dyads and at most one isolate are the only egalitarian, efficient, and stable networks for a large cost range. We show that some of these results are generalizable to networks of any size and are independent of using expected value theory.

Suggested Citation

  • Dooan, Gonul & van Assen, M.A.L.M. & van de Rijt, Arnout & Buskens, Vincent, 2007. "The Stability of Exchange Networks," Coalition Theory Network Working Papers 9098, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemct:9098
    DOI: 10.22004/ag.econ.9098
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    References listed on IDEAS

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