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Core–periphery and nested networks emerging from a simple model of network formation

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  • Olaizola, Norma
  • Valenciano, Federico

Abstract

This paper studies a simple model inspired by the seminal connections model of Jackson and Wolinsky (1996). Node-players can invest in links to connect with other nodes forming networks, but only direct links transmit value. Nodes may have different values and different decreasing returns abilities/technologies to form/strengthen links. The strength of a link depends on the amounts invested in it by the two nodes that it connects and is determined by a separable function of the investments of the players which form the link. Nash-stable and efficient networks are characterized, and a variety of their architectures identified for different configurations of values and technologies.

Suggested Citation

  • Olaizola, Norma & Valenciano, Federico, 2024. "Core–periphery and nested networks emerging from a simple model of network formation," Mathematical Social Sciences, Elsevier, vol. 129(C), pages 42-51.
    • Handle: RePEc:eee:matsoc:v:129:y:2024:i:c:p:42-51
    DOI: 10.1016/j.mathsocsci.2024.03.003
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    References listed on IDEAS

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    1. Norma Olaizola & Federico Valenciano, 2023. "A connections model with decreasing returns link-formation technology," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 14(1), pages 31-61, March.
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