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Network formation under institutional constraints

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  • Olaizola Ortega, María Norma
  • Valenciano Llovera, Federico

Abstract

We study the effects of institutional constraints on stability, efficiency and network formation. An exogenous "societal cover" consisting of a collection of possibly overlapping subsets covering the set of players specifies the social organization in different groups or "societies". It is assumed that a player may imitiate links only with players that belong to at least one society that she also belongs to, thus restricting the feasible strategies and networks. In this setting, we examine the impact of such societal constraints on stable/efficient architectures and on dynamics. We also study stability and stochastic stability in the presence of decay.

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Bibliographic Info

Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number 2011-51.

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Date of creation: May 2011
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Handle: RePEc:ehu:ikerla:201151

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Postal: Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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Keywords: network; stability; dynamics; decay; stochastic stability;

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