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One-way Flow Networks: the Role of Heterogeneity

Author

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  • Andrea Galeotti

    (Faculty of Economics, Erasmus Universiteit Rotterdam)

Abstract

I study a one-way flow connections model in which players are heterogeneous with respect to values and the costs of establishing a link. I first show that values and costs asymmetries are crucial in determining the level of connectedness of a network. Interestingly, unconnected equilibria are asymmetric and central players may emerge. Second, I show that non-singleton components have a wheel architecture as far as the costs of linking are not partner specific. Otherwise also the flower architecture constitutes an equilibrium. I interpret these results as saying that asymmetric connections across players are a peculiar feature of homogeneous environments; by contrast, in heterogeneous settings players hold asymmetric connections, which are accompanied by the emergence of central players.

Suggested Citation

  • Andrea Galeotti, 2004. "One-way Flow Networks: the Role of Heterogeneity," Tinbergen Institute Discussion Papers 04-031/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20040031
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    References listed on IDEAS

    as
    1. Roth,Alvin E. (ed.), 1989. "The Shapley Value," Cambridge Books, Cambridge University Press, number 9780521361774.
    2. Basu, Kaushik & Weibull, Jorgen W., 1991. "Strategy subsets closed under rational behavior," Economics Letters, Elsevier, vol. 36(2), pages 141-146, June.
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    More about this item

    Keywords

    Networks; heterogeneity;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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