Network Formation With Endogenous Decay
AbstractThis 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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Bibliographic InfoPaper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2007-14.
Date of creation: Jun 2007
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Network; Decay; Strategic Interaction;
Find related papers by JEL classification:
- A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
- D20 - Microeconomics - - Production and Organizations - - - General
- J00 - Labor and Demographic Economics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-23 (All new papers)
- NEP-GTH-2007-06-23 (Game Theory)
- NEP-NET-2007-06-23 (Network Economics)
- NEP-SOC-2007-06-23 (Social Norms & Social Capital)
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- 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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