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Eight degrees of separation

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  • Pin, Paolo

Abstract

We present a network formation game whose equilibria are undirected networks. Every connected couple contributes to the aggregate payoff by a fixed quantity, and the outcome is split between players according to the Myerson value allocation rule. This setup shows a wide multiplicity of non-empty equilibria, all of them connected. We show that the efficient equilibria of the game are either the empty network, or a network whose diameter does not exceed a threshold of 8 (i.e. there are no two nodes with a distance greater than 8).

Suggested Citation

  • Pin, Paolo, 2011. "Eight degrees of separation," Research in Economics, Elsevier, vol. 65(3), pages 259-270, September.
    • Handle: RePEc:eee:reecon:v:65:y:2011:i:3:p:259-270
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    Cited by:

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    2. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
    3. De Jaegher, K. & Kamphorst, J.J.A., 2015. "Minimal two-way flow networks with small decay," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 217-239.

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    More about this item

    Keywords

    Network formation Myerson value;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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