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Networks with decreasing returns to linking

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  • Filippo Vergara Caffarelli

    ()
    (Bank of Italy JEL classification: C72, D83, D85)

Abstract

This paper presents a model of non-cooperative network formation in which the marginal benefit of new links eventually decreases. Agents link with each other to gain information and update their links according to better-reply dynamics. In the long run the system settles to a unique network architecture that consists of a constellation of starred wheels. This is reminiscent of some real-world features. Collections of smaller disjoint networks connecting only a few agents are more common than global networks connecting all the agents in a community. Differences within a connected component such as the centre and the periphery are established.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 734.

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Date of creation: Nov 2009
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Handle: RePEc:bdi:wptemi:td_734_09

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Related research

Keywords: networks; coordination; learning dynamics; non-cooperative games;

This paper has been announced in the following NEP Reports:

References

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