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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
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Handle: RePEc:dgr:kubcen:200470

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

Related research

Keywords: game theory; general equilibrium;

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References

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  1. Antoni Calvó-Armengol & Rahmi İlkılıç, 2009. "Pairwise-stability and Nash equilibria in network formation," International Journal of Game Theory, Springer, vol. 38(1), pages 51-79, March.
  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 & 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.
  4. repec:ebl:ecbull:v:3:y:2003:i:5:p:1-9 is not listed on IDEAS
  5. 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.
  6. 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.
  7. René van den Brink & Robert P. Gilles, 2003. "Explicit and Latent Authority in Hierarchical Organizations," Tinbergen Institute Discussion Papers 03-102/1, Tinbergen Institute.
  8. Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, EconWPA.
  9. Roger B. Myerson, 1976. "Graphs and Cooperation in Games," Discussion Papers 246, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Slikker, M., 2000. "Decision Making and Cooperation Restrictions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-82556, Tilburg University.
  11. Hart, Sergiu & Mas-Colell, Andreu, 1989. "Potential, Value, and Consistency," Econometrica, Econometric Society, vol. 57(3), pages 589-614, May.
  12. Jacques Durieu & Hans Haller & Philippe Solal, 2004. "Nonspecific Networking," Game Theory and Information 0403005, EconWPA.
  13. 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.
  14. 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.
  15. 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.
  16. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
  17. Jan K. Brueckner, 2004. "Friendship Networks," Econometric Society 2004 North American Winter Meetings 184, Econometric Society.
  18. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  19. 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.
  20. Ui, Takashi, 2000. "A Shapley Value Representation of Potential Games," Games and Economic Behavior, Elsevier, vol. 31(1), pages 121-135, April.
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Citations

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Cited by:
  1. Nicolas Querou & Sylvain Beal, 2006. "Bounded Rationality and Repeated Network Formation," Working Papers 2006.74, Fondazione Eni Enrico Mattei.
  2. Francis Bloch & Bhaskar Dutta, 2008. "Communication networks with endogeneous link strength," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-15, Indian Statistical Institute, New Delhi, India.
  3. Sudipta Sarangi & Robert P. Gilles, . "Stable Networks and Convex Payoffs," Departmental Working Papers 2005-13, Department of Economics, Louisiana State University.
  4. Angelo Mele, 2010. "A structural model of segregation in social networks," CeMMAP working papers CWP32/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  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.
  6. 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.
  7. 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.
  8. Subhadip Chakrabarti & Robert Gilles, 2007. "Network potentials," Review of Economic Design, Springer, vol. 11(1), pages 13-52, June.
  9. Gilles, Robert P. & Chakrabarti, Subhadip & Sarangi, Sudipta, 2012. "Nash equilibria of network formation games under consent," Mathematical Social Sciences, Elsevier, vol. 64(2), pages 159-165.
  10. Gilles, Robert P. & Sarangi, Sudipta, 2010. "Network formation under mutual consent and costly communication," Mathematical Social Sciences, Elsevier, vol. 60(3), pages 181-185, November.
  11. Rodrigo Harrison & Roberto Muñoz, 2008. "Stability and equilibrium selection in a link formation game," Economic Theory, Springer, vol. 37(2), pages 335-345, November.
  12. Robert P. Gilles & Sudipta Sarangi, 2006. "Building Social Networks," Discussion Papers of DIW Berlin 642, DIW Berlin, German Institute for Economic Research.

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