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Social Network Formation with Consent

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Author Info

  • Gilles, R.P.
  • Sarangi, S.

    (Tilburg University, Center for Economic Research)

Abstract

We investigate the equilibria of game theoretic models of network formation that are based on individual actions only.Our approach is grounded in three simple and realistic principles: (1) Link formation should be a binary process of consent.(2) Link formation should be costly.(3) The class of network payoff functions should be as general as possible.It is accepted that these consent models have a very large number of equilibria.However, until now no characterization of these equilibria has been established in the literature.We aim to fill this void and provide characterizations of stable networks or the cases of two-sided and one-sided link formation costs.Furthermore, we provide a comparison of Nash equilibria with potential maximizers for a certain specification.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2004-70.

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Date of creation: 2004
Date of revision:
Handle: RePEc:dgr:kubcen:200470

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Web page: http://center.uvt.nl

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References

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  1. Gilles, R.P. & Chakrabarti, S. & Sarangi, S. & Badasyan, N., 2004. "The Role of Middlemen inEfficient and Strongly Pairwise Stable Networks," Discussion Paper 2004-64, Tilburg University, Center for Economic Research.
  2. Paul Belleflamme & Francis Bloch, 2004. "Market sharing agreements and collusive networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 387-411, 05.
  3. Slikker, Marco & Gilles, Robert P. & Norde, Henk & Tijs, Stef, 2005. "Directed networks, allocation properties and hierarchy formation," Mathematical Social Sciences, Elsevier, vol. 49(1), pages 55-80, January.
  4. Ui, Takashi, 2000. "A Shapley Value Representation of Potential Games," Games and Economic Behavior, Elsevier, vol. 31(1), pages 121-135, April.
  5. repec:ebl:ecbull:v:3:y:2003:i:5:p:1-9 is not listed on IDEAS
  6. Rachel E. Kranton & Deborah F. Minehart, 2001. "A Theory of Buyer-Seller Networks," American Economic Review, American Economic Association, vol. 91(3), pages 485-508, June.
  7. Jan K. Brueckner, 2004. "Friendship Networks," Econometric Society 2004 North American Winter Meetings 184, Econometric Society.
  8. Jacques Durieu & Hans Haller & Philippe Solal, 2004. "Nonspecific Networking," Game Theory and Information 0403005, EconWPA.
  9. Stef Tijs & Anne van den Nouweland & Bhaskar Dutta, 1998. "Link formation in cooperative situations," International Journal of Game Theory, Springer, vol. 27(2), pages 245-256.
  10. Antoni Calvó-Armengol & Rahmi Ilkiliç, 2005. "Pairwise-Stability and Nash Equilibria in Network Formation," Working Papers 2005.34, Fondazione Eni Enrico Mattei.
  11. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
  12. Slikker, M. & Dutta, B. & Tijs, S.H. & Nouweland, C.G.A.M. van den, 2000. "Potential maximizers and network formation," Open Access publications from Tilburg University urn:nbn:nl:ui:12-84647, Tilburg University.
  13. René van den Brink & Robert P. Gilles, 2003. "Explicit and Latent Authority in Hierarchical Organizations," Tinbergen Institute Discussion Papers 03-102/1, Tinbergen Institute.
  14. Slikker, M., 2000. "Decision Making and Cooperation Restrictions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-82556, Tilburg University.
  15. Bloch, Francis & Jackson, Matthew, 2004. "The Formation of Networks with Transfers among Players," Working Papers 1194, California Institute of Technology, Division of the Humanities and Social Sciences.
  16. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  17. Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, EconWPA.
  18. Roger B. Myerson, 1976. "Graphs and Cooperation in Games," Discussion Papers 246, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  19. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
  20. Hart, Sergiu & Mas-Colell, Andreu, 1989. "Potential, Value, and Consistency," Econometrica, Econometric Society, vol. 57(3), pages 589-614, May.
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Citations

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Cited by:
  1. Sudipta Sarangi & Robert P. Gilles, . "Stable Networks and Convex Payoffs," Departmental Working Papers 2005-13, Department of Economics, Louisiana State University.
  2. Rodrigo Harrison & Roberto Muñoz, 2008. "Stability and equilibrium selection in a link formation game," Economic Theory, Springer, vol. 37(2), pages 335-345, November.
  3. Robert P. Gilles & Sudipta Sarangi, 2006. "Building Social Networks," Discussion Papers of DIW Berlin 642, DIW Berlin, German Institute for Economic Research.
  4. Angelo Mele, 2010. "A Structural Model of Segregation in Social Networks," Working Papers 10-16, NET Institute.
  5. 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.
  6. Beal, Sylvain & Querou, Nicolas, 2007. "Bounded rationality and repeated network formation," Mathematical Social Sciences, Elsevier, vol. 54(1), pages 71-89, July.
  7. Bloch, Francis & Dutta, Bhaskar, 2009. "Communication networks with endogenous link strength," Games and Economic Behavior, Elsevier, vol. 66(1), pages 39-56, May.
  8. Subhadip Chakrabarti & Robert P. Gilles, 2005. "Network Potentials," Bonn Econ Discussion Papers bgse28_2005, University of Bonn, Germany.
  9. Dev, Pritha, 2010. "Choosing `Me' and `My Friends': Identity in a Non-Cooperative Network Formation Game with Cost Sharing," MPRA Paper 21631, University Library of Munich, Germany.
  10. Sudipta Sarangi & Robert P. Gilles, . "The Role of Beliefs and Confidence in Building Social Networks," Departmental Working Papers 2005-15, Department of Economics, Louisiana State University.

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