The role of trust in costly network formation

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The role of trust in costly network formation

Author Info

Gilles, R.P.
Sarangi, S. (Tilburg University, Center for Economic Research)

Additional information is available for the following registered author(s):

Sudipta Sarangi

Abstract

We consider game theoretic models of social network formation. In this paper we limit our investigation to game theoretic models of network formation that are based on individual actions only. Our approach is based on three simple and realistic principles: (1) Link formation is a binary process of consent. (2) Link formation is costly. (3) The class of network payo functions should be as general as possible. We provide characterizations of stable networks under the hypothesis of mutual consent in the cases of two-sided and one-sided link formation costs. Furthermore, we introduce a new equilibrium concept based on a limited, realistic form of farsightedness or "trust" in network formation.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 53.

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Date of creation: 2003
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Handle: RePEc:dgr:kubcen:200353

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Paper
- Sudipta Sarangi & Robert P. Gilles, 2004. "The Role of Trust in Costly Network Formation," Econometric Society 2004 North American Summer Meetings 483, Econometric Society. [Downloadable!]

This paper has been announced in the following NEP Reports:

NEP-GTH-2003-07-10 (Game Theory)
NEP-NET-2003-09-08 (Network Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Other versions:
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Hans Haller & Sudipta Sarangi, 2003. "Nash Networks with Heterogeneous Agents," Discussion Papers of DIW Berlin 337, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Other versions:
- Sudipta Sarangi & H. Haller, . "Nash Networks with Heterogeneous Agents," Departmental Working Papers 2003-06, Department of Economics, Louisiana State University. [Downloadable!]
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Other versions:
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Other versions:
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- Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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Other versions:
- Matthew O. Jackson, 2003. "A survey of models of network formation: Stability and efficiency," Working Papers 1161, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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Other versions:
- Slikker, M. & Nouweland, A. van den, 1997. "A one-stage model of link formation and payoff division," Discussion Paper 23, Tilburg University, Center for Economic Research. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Gönül Dogan & M.A.L.M. van Assen & Arnout van de Rijt & Vincent Buskens, 2007. "The Stability of Exchange Networks," Working Papers 2007.66, Fondazione Eni Enrico Mattei. [Downloadable!]
Matthew O. Jackson, 2003. "A survey of models of network formation: Stability and efficiency," Working Papers 1161, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
Other versions:
- Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, EconWPA. [Downloadable!]
Marco A. Marini, 2007. "An Overview of Coalitions and Networks Formation Models for Economic Applications," Working Papers 0707, CREI Università degli Studi Roma Tre, revised 2007. [Downloadable!]
Francis Bloch & Matthew Jackson, 2006. "Definitions of equilibrium in network formation games," International Journal of Game Theory, Springer, vol. 34(3), pages 305-318, October. [Downloadable!] (restricted)
Gilles, R.P. & Chakrabarti, S. & Sarangi, S. & Badasyan, N., 2004. "The role of middlemen in efficient and strongly pairwise stable networks," Discussion Paper 64, Tilburg University, Center for Economic Research. [Downloadable!]
Marco Marini, 2007. "An Overview of Coalition & Network Formation Models for Economic Applications," Working Papers 0712, University of Urbino Carlo Bo, Department of Economics, revised 2007. [Downloadable!]
Sudipta Sarangi & H. Haller, . "Nash Networks with Heterogeneous Agents," Departmental Working Papers 2003-06, Department of Economics, Louisiana State University. [Downloadable!]
Other versions:
- Hans Haller & Sudipta Sarangi, 2003. "Nash Networks with Heterogeneous Agents," Discussion Papers of DIW Berlin 337, DIW Berlin, German Institute for Economic Research. [Downloadable!]

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