Advanced Search
MyIDEAS: Login

Nonspecific Networking

Contents:

Author Info

  • Jacques Durieu

    (University of Saint-Etienne)

  • Hans Haller

    (Virginia Tech)

  • Philippe Solal

    (University of Saint-Etienne)

Registered author(s):

    Abstract

    A new model of strategic network formation is developed and analyzed, where an agent's investment in links is nonspecific. The model comprises a large class of games which are both potential and super- or submodular games. We obtain comparative statics results for Nash equilibria with respect to investment costs for supermodular as well as submodular networking games. We also study logit-perturbed best-response dynamics for supermodular games with potentials. We find that the associated set of stochastically stable states forms a sublattice of the lattice of Nash equilibria and derive comparative statics results for the smallest and the largest stochastically stable state. Finally, we provide a broad spectrum of applications from social interaction to industrial organization. Models of strategic network formation typically assume that each agent selects his direct links to other agents in which to invest. Nonspecific networking means that an agent cannot select a specific subset of feasible links which he wants to establish or strengthen. Rather, each agent chooses an effort level or intensity of networking. In the simplest case, the agent faces a binary choice: to network or not to network. If an agent increases his networking effort, all direct links to other agents are strengthened to various degrees. We assume that benefits accrue only from direct links. The set of agents or players is finite. Each agent has a finite strategy set consisting of the networking levels to choose from. For any pair of agents, their networking levels determine the individual benefits which they obtain from interacting with each other. An agent derives an aggregate benefit from the pairwise interactions with all others. In addition, the agent incurs networking costs, which are a function of the agent's own networking level. The agent's payoff is his aggregate benefit minus his cost.

    Download Info

    If 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.
    File URL: http://128.118.178.162/eps/game/papers/0403/0403005.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by EconWPA in its series Game Theory and Information with number 0403005.

    as in new window
    Length: 37 pages
    Date of creation: 30 Mar 2004
    Date of revision:
    Handle: RePEc:wpa:wuwpga:0403005

    Note: Type of Document - pdf; pages: 37
    Contact details of provider:
    Web page: http://128.118.178.162

    Related research

    Keywords: Network Formation; Potential Games; Supermodular Games;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    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.:
    as in new window
    1. Philippe Solal & Hans Haller & Richard Baron & Jacques Durieu, 2002. "A note on control costs and logit rules for strategic games," Journal of Evolutionary Economics, Springer, vol. 12(5), pages 563-575.
    2. Kandori Michihiro & Rob Rafael, 1995. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Journal of Economic Theory, Elsevier, vol. 65(2), pages 383-414, April.
    3. Larry E. Blume, 1996. "Population Games," Working Papers 96-04-022, Santa Fe Institute.
    4. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x.
    5. Carlos Alós Ferrer & Ana B. Ania, 2002. "The Evolutionary Logic of Feeling Small," Vienna Economics Papers 0216, University of Vienna, Department of Economics.
    6. Voorneveld, Mark, 2000. "Best-response potential games," Economics Letters, Elsevier, vol. 66(3), pages 289-295, March.
    7. Burkhard Schipper, 2002. "Submodularity and the Evolution of Walrasian Behavior," Bonn Econ Discussion Papers bgse4_2003, University of Bonn, Germany.
    8. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-80, January.
    9. L. Blume, 2010. "The Statistical Mechanics of Strategic Interaction," Levine's Working Paper Archive 488, David K. Levine.
    10. Oddvar M. Kaarbøe & Alexander F. Tieman, 0000. "Equilibrium Selection in Games with Macroeconomic Complementarities," Tinbergen Institute Discussion Papers 99-096/1, Tinbergen Institute.
    11. Hans Haller & Sudipta Sarangi, 2003. "Nash Networks with Heterogeneous Agents," Discussion Papers of DIW Berlin 337, DIW Berlin, German Institute for Economic Research.
    12. Federico Echenique, 2003. "The equilibrium set of two-player games with complementarities is a sublattice," Economic Theory, Springer, vol. 22(4), pages 903-905, November.
    13. Echenique, Federico & Sabarwal, Tarun, 2003. "Strong comparative statics of equilibria," Games and Economic Behavior, Elsevier, vol. 42(2), pages 307-314, February.
    14. Mattsson, Lars-Goran & Weibull, Jorgen W., 2002. "Probabilistic choice and procedurally bounded rationality," Games and Economic Behavior, Elsevier, vol. 41(1), pages 61-78, October.
    15. Zhou Lin, 1994. "The Set of Nash Equilibria of a Supermodular Game Is a Complete Lattice," Games and Economic Behavior, Elsevier, vol. 7(2), pages 295-300, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Bloch, Francis & Dutta, Bhaskar, 2009. "Communication networks with endogenous link strength," Games and Economic Behavior, Elsevier, vol. 66(1), pages 39-56, May.
    2. Gilles, R.P. & Sarangi, S., 2004. "Social Network Formation with Consent," Discussion Paper 2004-70, Tilburg University, Center for Economic Research.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpga:0403005. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.