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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)

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

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

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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.:
  1. René van den Brink & Robert P. Gilles, 2003. "Explicit and Latent Authority in Hierarchical Organizations," Tinbergen Institute Discussion Papers 03-102/1, Tinbergen Institute. [Downloadable!]
  2. 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!]
  3. 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. [Downloadable!] (restricted)
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  4. Slikker, Marco & Dutta, Bhaskar & van den Nouweland, Anne & Tijs, Stef, 2000. "Potential maximizers and network formation," Mathematical Social Sciences, Elsevier, vol. 39(1), pages 55-70, January. [Downloadable!] (restricted)
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  5. 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. [Downloadable!]
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  6. Ui, Takashi, 2000. "A Shapley Value Representation of Potential Games," Games and Economic Behavior, Elsevier, vol. 31(1), pages 121-135, April. [Downloadable!] (restricted)
  7. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  8. Slikker, M. & Nouweland, A. van den, 1999. "Network formation models with costs for establishing links," Research Memorandum 771, Tilburg University, Faculty of Economics and Business Administration. [Downloadable!]
  9. Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, EconWPA. [Downloadable!]
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  10. Rod Garratt & Cheng-Zhong Qin, 2003. "On cooperation structures resulting from simultaneous proposals," Economics Bulletin, Economics Bulletin, vol. 3(5), pages 1-9. [Downloadable!]
  11. 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. [Downloadable!] (restricted)
  12. Jacques Durieu & Hans Haller & Philippe Solal, 2004. "Nonspecific Networking," Game Theory and Information 0403005, EconWPA. [Downloadable!]
  13. 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. [Downloadable!] (restricted)
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  14. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May. [Downloadable!] (restricted)
  15. 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. [Downloadable!] (restricted)
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  16. Hart, Sergiu & Mas-Colell, Andreu, 1989. "Potential, Value, and Consistency," Econometrica, Econometric Society, vol. 57(3), pages 589-614, May. [Downloadable!] (restricted)
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(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.)

  1. Nicolas Querou & Sylvain Beal, 2006. "Bounded Rationality and Repeated Network Formation," Working Papers 2006.74, Fondazione Eni Enrico Mattei. [Downloadable!]
  2. Sudipta Sarangi & Robert P. Gilles, . "Stable Networks and Convex Payoffs," Departmental Working Papers 2005-13, Department of Economics, Louisiana State University. [Downloadable!]
    Other versions:
  3. Robert P. Gilles & Sudipta Sarangi, 2006. "Building Social Networks," Discussion Papers of DIW Berlin 642, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  4. Bloch, Francis & Dutta, Bhaskar, 2005. "Communication Networks with Endogenous Link Strength," The Warwick Economics Research Paper Series (TWERPS) 723, University of Warwick, Department of Economics. [Downloadable!]
  5. 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. [Downloadable!]
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