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Efficient networks in games with local complementarities

Author

Listed:
  • Belhaj, Mohamed

    (Centrale Marseille, Aix-Marseille School of Economics, CNRS and EHESS)

  • Bervoets, Sebatian

    (Aix-Marseille University, Aix-Marseille School of Economics, CNRS and EHESS)

  • Deroïan, Frédéric

    (Aix-Marseille University, Aix-Marseille School of Economics, CNRS and EHESS)

Abstract

We address the problem of a planner looking for the efficient network when agents play a network game with local complementarities and links are costly. We show that for general network cost functions, efficient networks belong to the class of Nested-Split Graphs. Next, we refine our results and find that, depending on the specification of the network cost function, complete networks, core-periphery networks, dominant group architectures, quasi-star and quasi-complete networks can be efficient.

Suggested Citation

  • Belhaj, Mohamed & Bervoets, Sebatian & Deroïan, Frédéric, 2016. "Efficient networks in games with local complementarities," Theoretical Economics, Econometric Society, vol. 11(1), January.
  • Handle: RePEc:the:publsh:1742
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2017. "Efficiency of weighted networks," IKERLANAK Ikerlanak;2017-104, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    2. Grandjean, G. & Tellone, D. & Vergote, W., 2017. "Endogenous network formation in a Tullock contest," Mathematical Social Sciences, Elsevier, vol. 85(C), pages 1-10.
    3. Hiller, Timo, 2017. "Peer effects in endogenous networks," Games and Economic Behavior, Elsevier, vol. 105(C), pages 349-367.
    4. Yang Sun & Wei Zhao & Junjie Zhou, 2021. "Structural Interventions in Networks," Papers 2101.12420, arXiv.org, revised Feb 2021.
    5. Deng, Liuchun & Sun, Yufeng, 2017. "Criminal network formation and optimal detection policy: The role of cascade of detection," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 43-63.
    6. Chukwudi Henry Dike, 2020. "Strategic Interactions in Financial Networks," 2020 Papers pdi579, Job Market Papers.
    7. Norma Olaizola & Federico Valenciano, 2020. "Dominance of weighted nested split graph networks in connections models," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(1), pages 75-96, March.
    8. Chen, Ying-Ju & Zenou, Yves & Zhou, Junjie, 2020. "Network Topology and Market Structure," CEPR Discussion Papers 14495, C.E.P.R. Discussion Papers.
    9. Kim, Jun Sung & Patacchini, Eleonora & Picard, Pierre M. & Zenou, Yves, 2017. "Urban Interactions," Working Paper Series 1192, Research Institute of Industrial Economics.
    10. Lindquist, Matthew & Sauermann, Jan & Zenou, Yves, 2015. "Network Effects on Worker Productivity," CEPR Discussion Papers 10928, C.E.P.R. Discussion Papers.
    11. Mohamed Belhaj & Frédéric Deroian, 2015. "Contracting on Networks," AMSE Working Papers 1501, Aix-Marseille School of Economics, France.
    12. Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2016. "A Marginalist Model of Network Formation," IKERLANAK Ikerlanak;2016-99, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    13. Jadbabaie, Ali & Kakhbod, Ali, 2019. "Optimal contracting in networks," Journal of Economic Theory, Elsevier, vol. 183(C), pages 1094-1153.

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    More about this item

    Keywords

    Network games; strategic complementarity; nested split graphs;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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