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Friendship Networks

  • Jan K. Brueckner

This paper develops a model of social networks different from those presented in the recent literature. In contrast to existing models, the level of investment in link formation is a continuous decision variable, and links form stochastically rather than deterministically, with the probability depending on the noncooperative investment choices of both parties. Since the network structure is then stochastic rather than deterministic, the actual pattern of links cannot be specified, as in previous models, with the analysis focusing instead on which links are most likely to form. This alternate approach leads to a much simpler mathematical structure than in previous work. The analysis, which is couched in the context of friendship networks, shows that individual investment in friendship formation is too low. In addition, the analysis shows that, in an asymmetric setting where one individual has personal magnetism or a broad group of acquaintances, friendship links involving this attractive agent are most likely to form. Copyright Blackwell Publishing, Inc. 2006

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Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 46 (2006)
Issue (Month): 5 ()
Pages: 847-865

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Handle: RePEc:bla:jregsc:v:46:y:2006:i:5:p:847-865
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  1. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  2. Calvó-Armengol, Antoni & Zenou, Yves, 2003. "Job Matching, Social Network and Word-of-Mouth Communication," IZA Discussion Papers 771, Institute for the Study of Labor (IZA).
  3. Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
  4. Matthew O. Jackson & Alison Watts, 2000. "On the Formation of Interaction Networks in Social Coordination Games," Econometric Society World Congress 2000 Contributed Papers 0778, Econometric Society.
  5. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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