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Network Formation With Endogenous Decay

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  • Francesco Feri

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    Abstract

    This paper considers a model of economic network characterized by an endogenous architecture and frictions in the relations among agents as described in Bala and Goyal (2000). We propose a similar network model with the difference that frictions in the relations among agents are endogenous. Frictions are modeled as dependent on the result of a coordination game, played by every pair of directly linked agents and characterized by 2 equilibria: one efficient and the other risk dominant. The model has a multiplicity of equilibria and we produce a characterization of those are stochastically stable.

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    File URL: http://eeecon.uibk.ac.at/wopec2/repec/inn/wpaper/2007-14.pdf
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    Bibliographic Info

    Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2007-14.

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    Length: 37
    Date of creation: Jun 2007
    Date of revision:
    Handle: RePEc:inn:wpaper:2007-14

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    Web page: http://www.uibk.ac.at/fakultaeten/volkswirtschaft_und_statistik/index.html.en
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    Related research

    Keywords: Network; Decay; Strategic Interaction;

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    Cited by:
    1. Francesco Feri & Miguel A.Mel?ndez-Jim?nez, 2009. "Coordination in Evolving Networks with Endogenous Decay," Working Papers 2009-19, Faculty of Economics and Statistics, University of Innsbruck.

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