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In search of efficient network structures: The needle in the haystack

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  • Nicolas Carayol (ADIS, BETA)
  • Pascale Roux (ADIS, BETA)
  • Murat Yildizoglu (GREThA)

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 parameters values. We also show that this approach can provide new exploratory results for the linear-spatialized connections model of Johnson and Gilles (2000), in which the efficient allocation of bilateral connections is driven by contradictory forces that push either for a centralized structure around a coordinating agent, or for only locally and evenly distributed connections.

Suggested Citation

  • Nicolas Carayol (ADIS, BETA) & Pascale Roux (ADIS, BETA) & Murat Yildizoglu (GREThA), 2007. "In search of efficient network structures: The needle in the haystack," Cahiers du GREThA 2007-11, Groupe de Recherche en Economie Théorique et Appliquée.
  • Handle: RePEc:grt:wpegrt:2007-11
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    File URL: http://cahiersdugretha.u-bordeaux4.fr/2007/2007-11.pdf
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    References listed on IDEAS

    as
    1. Carayol, Nicolas & Roux, Pascale, 2009. "Knowledge flows and the geography of networks: A strategic model of small world formation," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 414-427, August.
    2. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    3. 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.
    4. Matthew O. Jackson, 2003. "A Survey of Models of Network Formation: Stability and Efficiency," Game Theory and Information 0303011, EconWPA.
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    Cited by:

    1. Johannes VAN DER POL, 2016. "Social interactions between innovating firms: an analytical review of the literature," Cahiers du GREThA 2016-23, Groupe de Recherche en Economie Théorique et Appliquée.

    More about this item

    Keywords

    Networks; Efficiency; Genetic Algorithms;

    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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