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Network formation under institutional constraints

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  • Olaizola Ortega, María Norma
  • Valenciano Llovera, Federico

Abstract

We study the effects of institutional constraints on stability, efficiency and network formation. An exogenous "societal cover" consisting of a collection of possibly overlapping subsets covering the set of players specifies the social organization in different groups or "societies". It is assumed that a player may imitiate links only with players that belong to at least one society that she also belongs to, thus restricting the feasible strategies and networks. In this setting, we examine the impact of such societal constraints on stable/efficient architectures and on dynamics. We also study stability and stochastic stability in the presence of decay.

Suggested Citation

  • Olaizola Ortega, María Norma & Valenciano Llovera, Federico, 2011. "Network formation under institutional constraints," IKERLANAK 2011-51, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  • Handle: RePEc:ehu:ikerla:6257
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    References listed on IDEAS

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    More about this item

    Keywords

    network; stability; dynamics; decay; stochastic stability;

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D20 - Microeconomics - - Production and Organizations - - - General
    • J00 - Labor and Demographic Economics - - General - - - General

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