Eight degrees of separation
AbstractThe paper presents a model of network formation where every connected couple give a contribution to the aggregate payoff, eventually discounted by their distance, and the resources are split between agents through the Myerson value. As equilibrium concept we adopt a refinement of pairwise stability. The only parameters are the number N of agents and a constant cost k for every agent to maintain any single link. This setup shows a wide multiplicity of equilibria, all of them connected, as k ranges over non trivial cases. We are able to show that, for any N, when the equilibrium is a tree (acyclical connected graph), which happens for high k, and there is no decay, the diameter of such a network never exceeds 8 (i.e. there are no two nodes with distance greater than 8). Adopting no decay and studying only trees, we facilitate the analysis but impose worst-case scenarios: we conjecture that the limit of 8 should apply for any possible non--empty equilibrium with any decay function.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2006_26.
Length: 22 pages
Date of creation: 2006
Date of revision:
Contact details of provider:
Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Network Formation; Myerson value;
Other versions of this item:
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
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.:
- Qin, Cheng-Zhong, 1996. "Endogenous Formation of Cooperation Structures," Journal of Economic Theory, Elsevier, vol. 69(1), pages 218-226, April.
- Matthew O. Jackson, 2003.
"Allocation Rules for Network Games,"
Game Theory and Information
- Subhadip Chakrabarti & Robert Gilles, 2007.
Review of Economic Design,
Springer, vol. 11(1), pages 13-52, June.
- Noemí Navarro & Andrés Perea, 2001. "Bargaining In Networks And The Myerson Value," Economics Working Papers we016121, Universidad Carlos III, Departamento de Economía.
- Jackson, Matthew O., 1998.
"The Evolution of Social and Economic Networks,"
1044, California Institute of Technology, Division of the Humanities and Social Sciences.
- Perez-Castrillo, David & Wettstein, David, 2001.
"Bidding for the Surplus : A Non-cooperative Approach to the Shapley Value,"
Journal of Economic Theory,
Elsevier, vol. 100(2), pages 274-294, October.
- David Pérez-Castrillo & David Wettstein, . "Bidding For The Surplus: A Non-Cooperative Approach To The Shapley Value," UFAE and IAE Working Papers 461.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Paul Belleflamme & Francis Bloch, 2004.
"Market sharing agreements and collusive networks,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 387-411, 05.
- ELLEFLAMME, Paul & BLOCH, Francis, . "Market sharing agreements and collusive networks," CORE Discussion Papers RP -1711, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paul Belleflamme & Francis Bloch, 2001. "Market Sharing Agreements and Collusive Networks," Working Papers 443, Queen Mary, University of London, School of Economics and Finance.
- Matthew O. Jackson & Asher Wolinsky, 1995.
"A Strategic Model of Social and Economic Networks,"
1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthew O. Jackson & Brian W. Rogers, 2005.
"Search in the Formation of Large Networks: How Random are Socially Generated Networks?,"
Game Theory and Information
- 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.
- Matthew O. Jackson & Brian W. Rogers, 2007. "Meeting Strangers and Friends of Friends: How Random Are Social Networks?," American Economic Review, American Economic Association, vol. 97(3), pages 890-915, June.
- Goyal, Sanjeev & Vega-Redondo, Fernando, 2007. "Structural holes in social networks," Journal of Economic Theory, Elsevier, vol. 137(1), pages 460-492, November.
- Gul, Faruk, 1989. "Bargaining Foundations of Shapley Value," Econometrica, Econometric Society, vol. 57(1), pages 81-95, January.
- (*), Anne van den Nouweland & Marco Slikker, 2000. "original papers : Network formation models with costs for establishing links," Review of Economic Design, Springer, vol. 5(3), pages 333-362.
- Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geraldine Ludbrook).
If references are entirely missing, you can add them using this form.