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Segregation versus assimilation in friendship networks with farsighted and myopic agents

Author

Listed:
  • LUO Chenghong,

    (CORE, UCLouvain and Ca’Foscoari University)

  • MAULEON Ana,

    (Université Saint Louis, Bruxelles)

  • VANNETELBOSCH Vincent,

    (CORE, UCLouvain)

Abstract

We reconsider die Marti and Zenou (2017) model of friendship network formation where individuals belong to two different communities. Benefits from direct and indirect connections decay with distance while costs of forming links depend on community memberships. Individuals are now either farsighted or myopic when deciding about the friendship links they want to form. When all individuals are myopic many inefficient friendship networks (e.g. complete segregation) can arise. When the larger (smaller) community is farsighted while the smaller (larger) community is myopic, the friendsip network where the myopic community is assimilated into the farsighted community is the unique stable network when inter-community costs are large. In fact, farsightedness helps the society to avoid ending up segregated. Once inter-community costs are small enough, the coplete integration network become stable. Finally, when all individuals are farsighted, the friendship network where the smaller community ends up being assimilated into the dominant community is likely to arise.

Suggested Citation

  • LUO Chenghong, & MAULEON Ana, & VANNETELBOSCH Vincent,, 2020. "Segregation versus assimilation in friendship networks with farsighted and myopic agents," LIDAM Discussion Papers CORE 2020017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2020017
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    More about this item

    Keywords

    friendship networks; stable sets; myopic and farsighted players; assimilation; segregation;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General

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