Nash Networks with Heterogeneous Agents
A non-cooperative model of network formation is developed. Agents form links with others based on the cost of the link and its assessed benefit. Link formation is one-sided, i.e., agents can initiate links with other agents with- out their consent, provided the agent forming the link makes the appropriate investment. Information flw is two-way. The model builds on the work of Bala and Goyal, but allows for agent heterogeneity. Whereas they permit links to fail with a certain common probability, in our model the probability of failure can be different for different links. We investigate Nash networks that exhibit connectedness and super-connectedness. We provide an explicit characterization of certain star networks. Efficiency and Pareto-optimality issues are discussed through examples. We explore alternative model specifications to address potential shortcomings.
(This abstract was borrowed from another version of this item.)
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: Baton Rouge, LA 70803-6306|
Web page: http://www.business.lsu.edu/economics
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-51, September.
- Jackson, Matthew O. & Watts, Alison, 2002.
"On the formation of interaction networks in social coordination games,"
Games and Economic Behavior,
Elsevier, vol. 41(2), pages 265-291, November.
- Matthew O. Jackson & Alison Watts, 2000. "On the Formation of Interaction Networks in Social Coordination Games," Econometric Society World Congress 2000 Contributed Papers 0778, Econometric Society.
- McBride, Michael, 2008.
"Position-specific information in social networks: Are you connected?,"
Mathematical Social Sciences,
Elsevier, vol. 56(2), pages 283-295, September.
- Michael McBride, 2003. "Position-specific information in social networks: Are you connected?," Levine's Working Paper Archive 506439000000000265, David K. Levine.
- Sudipta Sarangi & Robert P. Gilles, 2004.
"The Role of Trust in Costly Network Formation,"
Econometric Society 2004 North American Summer Meetings
483, Econometric Society.
- Kalai, Ehud & Postlewaite, Andrew & Roberts, John, 1978. "Barriers to trade and disadvantageous middlemen: Nonmonotonicity of the core," Journal of Economic Theory, Elsevier, vol. 19(1), pages 200-209, October.
- Watts, Alison, 2001. "A Dynamic Model of Network Formation," Games and Economic Behavior, Elsevier, vol. 34(2), pages 331-341, February.
- Borm, P.E.M. & van den Nouweland, C.G.A.M. & Tijs, S.H., 1994.
"Cooperation and communication restrictions : A survey,"
Other publications TiSEM
513999f5-0c87-4204-a1ff-9, Tilburg University, School of Economics and Management.
- Borm, P.E.M. & van den Nouweland, C.G.A.M. & Tijs, S.H., 1991. "Cooperation and communication restrictions : A survey," Research Memorandum FEW 507, Tilburg University, School of Economics and Management.
- Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-91, June.
- Jackson, Matthew O., 1998.
"The Evolution of Social and Economic Networks,"
1044, California Institute of Technology, Division of the Humanities and Social Sciences.
- Sanjeev Goyal & Sumit Joshi, 2006. "Unequal connections," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(3), pages 319-349, October.
- Glenn C. Loury, 1976. "A Dynamic Theory of Racial Income Differences," Discussion Papers 225, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Dutta, Bhaskar & Mutuswami, Suresh, 1997.
Journal of Economic Theory,
Elsevier, vol. 76(2), pages 322-344, October.
- Roger B. Myerson, 1976. "Graphs and Cooperation in Games," Discussion Papers 246, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthew O. Jackson, 2002. "The Stability and Efficiency of Economic and Social Networks," Microeconomics 0211011, EconWPA.
- Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-50, October.
When requesting a correction, please mention this item's handle: RePEc:lsu:lsuwpp:2003-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.