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Network formation with closeness incentives

  • Berno Buechel

    ()

    (Institute of Mathematical Economics, Bielefeld University)

We study network formation in a strategic setting where every agent strives for short paths to the other agents. The main parameter of our model is the marginal rate of substitution between network benefits and linking costs. We provide boundaries of stable networks for increasing and decreasing marginal returns. The formulated model stands in strong relation to the famous connections model (Jackson and Wolinsky ‘96): we show that for certain parameter values both models induce the same network structures.

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File URL: http://www.imw.uni-bielefeld.de/papers/files/imw-wp-395.pdf
File Function: First version, 2007
Download Restriction: no

Paper provided by Bielefeld University, Center for Mathematical Economics in its series Working Papers with number 395.

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Length: 22 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:bie:wpaper:395
Contact details of provider: Postal: Postfach 10 01 31, 33501 Bielefeld
Phone: +49(0)521-106-4907
Web page: http://www.imw.uni-bielefeld.de/

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  1. Matthew O. Jackson & Asher Wolinsky, 1995. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Antoni Calvó-Armengol & Rahmi İlkılıç, 2009. "Pairwise-stability and Nash equilibria in network formation," International Journal of Game Theory, Springer, vol. 38(1), pages 51-79, March.
  3. Andrea Galeotti & Sanjeev Goyal & Jurjen Kamphorst, 2003. "Network Formation with Heterogeneous Players," Economics Discussion Papers 562, University of Essex, Department of Economics.
  4. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
  5. K. de Jaegher & J.J.A. Kamphorst, 2008. "Network formation with decreasing marginal benefits of information," Working Papers 08-16, Utrecht School of Economics.
  6. Sanjeev Goyal & Sumit Joshi, 2006. "Unequal connections," International Journal of Game Theory, Springer, vol. 34(3), pages 319-349, October.
  7. Goyal, Sanjeev & Vega-Redondo, Fernando, 2007. "Structural holes in social networks," Journal of Economic Theory, Elsevier, vol. 137(1), pages 460-492, November.
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