Network Formation with Heterogeneous Players

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Network Formation with Heterogeneous Players

Author Info

Andrea Galeotti () (Erasmus University Rotterdam)
Sanjeev Goyal () (University of London, and Erasmus University Rotterdam)

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

Andrea Galeotti

Abstract

This paper studies network formation in settings where players are heterogeneous with respect to benefits as well as the costs of forming links. Our results demonstrate that centrality, center-sponsorship and short network diameter are robust features of equilibrium networks. We find that in a society with many groups, where it is cheaper to connect within groups as compared to across groups, strategic play by individuals leads to a network architecture in which there is a core group which is entirely internally connected while all the other groups are entirely externally linked and hence completely fragmented. Since internal/within group links are cheaper to form, this implies that individual incentives may generate a significant waste of valuable social resources.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-069/1.

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Date of creation: 10 Jul 2002
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Handle: RePEc:dgr:uvatin:20020069

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Paper
- Andrea Galeotti & Sanjeev Goyal & Jurjen Kamphorst, 2003. "Network Formation with Heterogeneous Players," Economics Discussion Papers 562, University of Essex, Department of Economics. [Downloadable!]

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other

This paper has been announced in the following NEP Reports:

NEP-ALL-2002-12-02 (All new papers)
NEP-GTH-2002-12-02 (Game Theory)

Cited by:
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Sudipta Sarangi & Pascal Billand & Christophe Bravard, . "Heterogeneity in Nash Networks," Departmental Working Papers 2006-18, Department of Economics, Louisiana State University. [Downloadable!]
Jackson, Matthew O. & Rogers, Brian W., 2005. "Search in the formation of large networks: How random are socially generated networks?," Working Papers 1216, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
Other versions:
- Matthew O. Jackson & Brian W. Rogers, 2005. "Search in the Formation of Large Networks: How Random are Socially Generated Networks?," Game Theory and Information 0503005, EconWPA. [Downloadable!]
Andrea Galeotti & Miguel Meléndez, 2004. "Exploitation and Cooperation in Networks," Tinbergen Institute Discussion Papers 04-076/1, Tinbergen Institute. [Downloadable!]
Goeree,Jacob K. & Riedl,Arno & Ule,Aljaz, 2005. "In Search of Stars: Network Formation among Heterogeneous Agents," Research Memoranda 032, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
Other versions:
- Aljaž Ule & Jacob K. Goeree & Arno Riedl, 2007. "In Search of Stars: Network Formation among Heterogeneous Agents," Working Papers 2007.65, Fondazione Eni Enrico Mattei. [Downloadable!]
- Jacob K. Goeree & Arno Riedl & Aljaz Ule, 2005. "In Search of Stars: Network Formation among Heterogeneous Agents," IZA Discussion Papers 1754, Institute for the Study of Labor (IZA). [Downloadable!]
Sudipta Sarangi & Pascal Billand & Christophe Bravard, . "Existence of Nash Networks in One-Way Flow Models (Revised Version of LSU Working Paper 2006-05)," Departmental Working Papers 2007-02, Department of Economics, Louisiana State University. [Downloadable!]
Matthew O. Jackson & Brian W. Rogers, 2005. "The Economics of Small Worlds," Game Theory and Information 0503004, EconWPA. [Downloadable!]
Other versions:
- Jackson, Matthew O. & Rogers, Brian W., 2005. "The economics of small worlds," Working Papers 1214, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
- Matthew O. Jackson & Brian W. Rogers, 2005. "The Economics of Small Worlds," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 617-627, 04/05. [Downloadable!] (restricted)
Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, EconWPA. [Downloadable!]
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!]
- Matthew O. Jackson, . "A Survey of Models of Network Formation: Stability and Efficiency," Grand Coalition 16, Grand Coalition Web Site. [Downloadable!]
Alfonso Miranda, 2003. "Socio-economic characteristics, completed fertility, and the transition from low to high order parities in Mexico," Labor and Demography 0308001, EconWPA. [Downloadable!]
Chantarat, Sommarat & Barrett, Christopher B., 2007. "Social Network Capital, Economic Mobility and Poverty Traps," MPRA Paper 1947, University Library of Munich, Germany. [Downloadable!]
Other versions:
- Chantarat, Sommarat & Barrett , Christopher, 2008. "Social Network Capital, Economic Mobility and Poverty Traps," MPRA Paper 6841, University Library of Munich, Germany. [Downloadable!]
Sudipta Sarangi & Rajgopal Kannan & Lydia Ray, . "The Structure of Information Networks," Departmental Working Papers 2004-05, Department of Economics, Louisiana State University. [Downloadable!]
Other versions:
- Sudipta Sarangi & R. Kannan & L. Ray, . "The Structure of Information Networks," Departmental Working Papers 2003-01, Department of Economics, Louisiana State University. [Downloadable!]
- Sarangi, Sudipta & Raj Kannan & Lydia Ray, 2003. "The Structure of Information Networks," Royal Economic Society Annual Conference 2003 182, Royal Economic Society. [Downloadable!]
- Rajgopal Kannan & Lydia Ray & Sudipta Sarangi, 2007. "The structure of information networks," Economic Theory, Springer, vol. 30(1), pages 119-134, January. [Downloadable!] (restricted)
Pramila Krishnan & Emanuela Sciubba, 2006. "Links and Architecture in Village Networks," Birkbeck Working Papers in Economics and Finance 0614, Birkbeck, School of Economics, Mathematics & Statistics. [Downloadable!]
Sudipta Sarangi & Hans Haller & Jurjen Kamphorst, . "(Non-)Existence and Scope of Nash Networks," Departmental Working Papers 2005-14, Department of Economics, Louisiana State University. [Downloadable!]
Other versions:
- Hans Haller & Jurjen Kamphorst & Sudipta Sarangi, 2007. "(Non-)existence and Scope of Nash Networks," Economic Theory, Springer, vol. 31(3), pages 597-604, June. [Downloadable!] (restricted)
Krishnan, P. & Sciubba, E., 2004. "Links and Architecture in Village Networks (previously: Endogenous Network Formation and Informal Institutions in Village Economies)," Cambridge Working Papers in Economics 0462, Faculty of Economics (formerly DAE), University of Cambridge. [Downloadable!]
Sudipta Sarangi & Pascal Billand & Christophe Bravard, . "Existence of Nash Networks in One-Way Flow Models," Departmental Working Papers 2006-05, Department of Economics, Louisiana State University. [Downloadable!]
Other versions:
- Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2007. "Existence of Nash Networks in One-Way Flow Models," Discussion Papers of DIW Berlin 751, DIW Berlin, German Institute for Economic Research. [Downloadable!]

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