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Who's Who in Networks. Wanted: The Key Player

  • Coralio Ballester
  • Antoni Calvó-Armengol
  • Yves Zenou

Finite population noncooperative games with linear-quadratic utilities, where each player decides how much action she exerts, can be interpreted as a network game with local payoff complementarities, together with a globally uniform payoff substitutability component and an own-concavity effect. For these games, the Nash equilibrium action of each player is proportional to her Bonacich centrality in the network of local complementarities, thus establishing a bridge with the sociology literature on social networks. This Bonacich-Nash linkage implies that aggregate equilibrium increases with network size and density. We then analyze a policy that consists of targeting the key player, that is, the player who, once removed, leads to the optimal change in aggregate activity. We provide a geometric characterization of the key player identified with an intercentrality measure, which takes into account both a player's centrality and her contribution to the centrality of the others. Copyright The Econometric Society 2006.

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File URL: http://hdl.handle.net/10.1111/j.1468-0262.2006.00709.x
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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 74 (2006)
Issue (Month): 5 (09)
Pages: 1403-1417

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Handle: RePEc:ecm:emetrp:v:74:y:2006:i:5:p:1403-1417
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