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Learning, Network Formation and Coordination

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Author Info
Sanjeev Goyal (Erasmus University Rotterdam)
Fernando Vega-Redondo (Universidad de Alicante)

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Abstract

In many economic and social contexts, individuals can undertake a transaction only if they are `linked' or related to each other. We take the view that these links are costly, in the sense that it takes effort and resources to create and maintain them. The link formation decisions of the players define a network of social interaction. We study the incentives of individuals to form links and the effects of this link formation on the nature of social coordination. Our analysis shows that equilibrium networks have simple architectures; they are either complete networks or stars. Moreover, the process of network formation has powerful effects on social coordination. For low costs of forming links all individuals coordinate on the the risk-dominant action, while for high costs of forming links individuals coordinate on the efficient action.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0113.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0113

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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.:
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  7. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-43, August. [Downloadable!] (restricted)
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  16. Bhaskar, V & Vega-Redondo, F, 1996. "Migration and the Evolution of Conventions," UFAE and IAE Working Papers 354.96, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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  24. Robson, Arthur J. & Vega-Redondo, Fernando, 1996. "Efficient Equilibrium Selection in Evolutionary Games with Random Matching," Journal of Economic Theory, Elsevier, vol. 70(1), pages 65-92, July. [Downloadable!] (restricted)
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  25. Goyal, Sanjeev & Janssen, Maarten C. W., 1997. "Non-Exclusive Conventions and Social Coordination," Journal of Economic Theory, Elsevier, vol. 77(1), pages 34-57, November. [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. Yannis M. Ioannides, 2005. "Random Graphs and Social Networks: An Economics Perspective," Discussion Papers Series, Department of Economics, Tufts University 0518, Department of Economics, Tufts University. [Downloadable!]
  2. Jakub Steiner, 2006. "Coordination of Mobile Labor," ESE Discussion Papers 152, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
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  3. Dunia López-Pintado & Fernando Vega Redondo & Sanjeev Goyal & Yann Bramoulle, 2002. "Network Formation And Anti-Coordination Games," Working Papers. Serie AD 2002-25, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
    Other versions:
  4. Francesco Feri, 2005. "Stochastic Stability in Network with Decay," Working Papers 2005.40, Fondazione Eni Enrico Mattei. [Downloadable!]
  5. Francesco Feri, 2005. "Network Formation with Endogenous Decay," Working Papers 2005.35, Fondazione Eni Enrico Mattei. [Downloadable!]
  6. Giorgio Fagiolo & Luigi Marengo & Marco Valente, 2003. "Endogenous Networks in Random Population Games," LEM Papers Series 2003/03, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  7. Giorgio Fagiolo, 2001. "Coordination, Local Interactions and Endogenous Neighborhood Formation," LEM Papers Series 2001/15, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  8. Matthew O. Jackson, 2002. "The Stability and Efficiency of Economic and Social Networks," Microeconomics 0211011, EconWPA. [Downloadable!]
  9. Giorgio Fagiolo & Luigi Marengo & Marco Valente, 2005. "Population Learning in a Model with Random Payoff Landscapes and Endogenous Networks," Computational Economics, Springer, vol. 24(4), pages 383-408, June. [Downloadable!] (restricted)
  10. Felipe Balmaceda, 2004. "Network Formation and Cooperation," Econometric Society 2004 Latin American Meetings 208, Econometric Society. [Downloadable!]
  11. Boris Salazar & María del Pilar Castillo, 2003. "Rationality, preferences and irregular war," COLOMBIAN ECONOMIC JOURNAL, COLOMBIAN ECONOMIC JOURNAL. [Downloadable!]
  12. Michael Kosfeld, . "Network Experiments," IEW - Working Papers iewwp152, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  13. 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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  14. Miguel A. Meléndez-Jiménez, 2002. "Network Formation And Coordination: Bargaining The Division Of Link Costs," Working Papers. Serie AD 2002-27, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  15. 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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  16. Albert Díaz-Aguilera & Alex Arenas & Conrad J. Pérez & Fernando Vega Redondo, 2001. "Self-Organized Criticality In Evolutionary Systems With Local Interaction," Working Papers. Serie AD 2000-30, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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