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Network Formation With Endogenous Decay

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  • Francesco Feri

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Abstract

This paper considers a model of economic network characterized by an endogenous architecture and frictions in the relations among agents as described in Bala and Goyal (2000). We propose a similar network model with the difference that frictions in the relations among agents are endogenous. Frictions are modeled as dependent on the result of a coordination game, played by every pair of directly linked agents and characterized by 2 equilibria: one efficient and the other risk dominant. The model has a multiplicity of equilibria and we produce a characterization of those are stochastically stable.

Suggested Citation

  • Francesco Feri, 2007. "Network Formation With Endogenous Decay," Working Papers 2007-14, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2007-14
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    File URL: https://www2.uibk.ac.at/downloads/c4041030/wpaper/2007-14.pdf
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    Cited by:

    1. Francesco Feri & Miguel A.Mel?ndez-Jim?nez, 2009. "Coordination in Evolving Networks with Endogenous Decay," Working Papers 2009-19, Faculty of Economics and Statistics, University of Innsbruck.

    More about this item

    Keywords

    Network; Decay; Strategic Interaction;

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • D20 - Microeconomics - - Production and Organizations - - - General
    • J00 - Labor and Demographic Economics - - General - - - General

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