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Rent Seeking and Power Hierarchies: A Noncooperative Model of Network Formation with Antagonistic Links

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  • Huremovic, Kenan

Abstract

Network structure has a significant role in determining the outcomes of many socioeconomic relationships, including the antagonistic ones. In this paper we study a situation in which agents, embedded in a network, simultaneously play interrelated bilateral contest games with their neighbors. Interrelatedness of contests induces complex local and global network effects. We first characterize the equilibrium of a game on an arbitrary fixed network. Then we study a dynamic network formation model, introducing a novel but intuitive link formation protocol. As links represent antagonistic relationships, link formation is unilateral while link destruction is bilateral. A complete k-partite network is the unique stable network topology. As a result, the model provides a micro-foundation for the structural balance concept in social psychology, and the main results go in line with theoretical and empirical findings from other disciplines, including international relations, sociology and biology.

Suggested Citation

  • Huremovic, Kenan, 2014. "Rent Seeking and Power Hierarchies: A Noncooperative Model of Network Formation with Antagonistic Links," Climate Change and Sustainable Development 172701, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:172701
    DOI: 10.22004/ag.econ.172701
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    References listed on IDEAS

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    1. Deroian, F., 2009. "Endogenous link strength in directed communication networks," Mathematical Social Sciences, Elsevier, vol. 57(1), pages 110-116, January.
    2. repec:cup:cbooks:9780511771576 is not listed on IDEAS
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    Cited by:

    1. Grandjean, G. & Tellone, D. & Vergote, W., 2016. "Cooperation, Competition and Entry in a Tullock Contest," LIDAM Discussion Papers CORE 2016032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    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. Marcin Dziubinski & Sanjeev Goyal & Adrien Vigier, 2015. "Conflict and Networks," Cambridge Working Papers in Economics 1565, Faculty of Economics, University of Cambridge.
    4. Ewerhart, Christian & Valkanova, Kremena, 2020. "Fictitious play in networks," Games and Economic Behavior, Elsevier, vol. 123(C), pages 182-206.
    5. Michael D. König & Dominic Rohner & Mathias Thoenig & Fabrizio Zilibotti, 2017. "Networks in Conflict: Theory and Evidence From the Great War of Africa," Econometrica, Econometric Society, vol. 85, pages 1093-1132, July.
    6. Yann Bramoullé & Rachel Kranton, 2015. "Games Played on Networks," Working Papers halshs-01180657, HAL.

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    More about this item

    Keywords

    Institutional and Behavioral Economics;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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