Network Design under Local Complementarities
AbstractWe consider agents playing a linear network game with strategic complementarities. We analyse the problem of a policy maker who can change the structure of the network in order to increase the aggregate efforts of the individuals and/or the sum of their utilities, given that the number of links of the network has to remain fixed. We identify some link reallocations that guarantee an improvement of aggregate efforts and/or aggregate utilities. With this comparative statics exercise, we then prove that the networks maximising both aggregate outcomes (efforts and utilities) belong to the class of Nested-Split Graphs.
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Bibliographic InfoPaper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1309.
Length: 39 pages
Date of creation: 12 Feb 2013
Date of revision: 12 Feb 2013
Network; Linear Interaction; Bonacich Centralities; Strategic Complementarity; Nested Split Graphs.;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-02 (All new papers)
- NEP-GTH-2013-03-02 (Game Theory)
- NEP-MIC-2013-03-02 (Microeconomics)
- NEP-NET-2013-03-02 (Network Economics)
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