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Efficiency of network structures: The needle in the haystack

Author

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  • Nicolas CARAYOL (ADIS, BETA)
  • Pascale ROUX (ADIS, BETA)
  • Murat YILDIZOGLU (E3I, IFReDE-GRES)

Abstract

The modelling of networks formation has recently became the object of an increasing interest in economics. One of the important issues raised in this literature is the one of networks efficiency. Nevertheless, for non trivial payoff functions, searching for efficient network structures turns out to be a very difficult analytical problem as well as a huge computational task, even for a relatively small number of agents. In this paper, we explore the possibility of using genetic algorithms (GA) techniques for identifying efficient network structures, because the GA have proved their power as a tool for solving complex optimization problems. The robustness of this method in predicting optimal network structures is tested on two simple stylized models introduced by Jackson and Wolinski (1996), for which the efficient networks are known over the whole state space of parameter values.

Suggested Citation

  • Nicolas CARAYOL (ADIS, BETA) & Pascale ROUX (ADIS, BETA) & Murat YILDIZOGLU (E3I, IFReDE-GRES), 2005. "Efficiency of network structures: The needle in the haystack," Cahiers du GRES (2002-2009) 2005-06, Groupement de Recherches Economiques et Sociales.
    • Handle: RePEc:grs:wpegrs:2005-06
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    File URL: http://cahiersdugres.u-bordeaux4.fr/2005/2005-06.pdf
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    Cited by:

    1. Moebert, Jochen, 2006. "Jefficiency vs. efficiency in social network models," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 25376, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Carayol, Nicolas & Roux, Pascale & YIldIzoGlu, Murat, 2008. "Inefficiencies in a model of spatial networks formation with positive externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 495-511, August.
    3. Möbert, Jochen, 2006. "Jefficiency vs. Efficiency in Social Network Models," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 36779, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    4. Moebert, Jochen, 2006. "Jefficiency vs. efficiency in social network models," Darmstadt Discussion Papers in Economics 161, Darmstadt University of Technology, Department of Law and Economics.

    More about this item

    Keywords

    Networks; Optimal network structure; Efficiency; Genetic Algorithms;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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