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Two-way Flow Networks with Small Decay

Author

Listed:
  • K. De Jaegher

    (Utrecht University)

  • J.J.A. Kamphorst

    (Erasmus University Rotterdam)

Abstract

This discussion paper resulted in an article in the Journal of Economic Behavior & Organization , 2015, 109, 217-239. This paper characterizes the set of equilibrium networks in the two-way flow model of network formation with small decay, and this for all increasing benefit functions of the players. We show that as long as the population is large enough, this set contains large- as well as small-diameter networks. For all benefit functions, the periphery-sponsored star is the most stable. When the marginal benefits of information are constant, all non-star networks are equally stable. With increasing marginal benefits of information, small-diameter networks in general tend to be more stable. However, with decreasing marginal benefits of information, large-diameter networks tend to be the most robust along with the periphery-sponsored star.

Suggested Citation

  • K. De Jaegher & J.J.A. Kamphorst, 2010. "Two-way Flow Networks with Small Decay," Tinbergen Institute Discussion Papers 10-125/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20100125
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    File URL: https://papers.tinbergen.nl/10125.pdf
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    References listed on IDEAS

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    1. Sudipta Sarangi & Pascal Billand & Christophe Bravard, 2006. "Heterogeneity in Nash Networks," Departmental Working Papers 2006-18, Department of Economics, Louisiana State University.
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    Citations

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    Cited by:

    1. Christophe Bravard & Sudipta Sarangi & PHILIPP MÖHLMEIER & AGNIESZKA RUSINOWSKA & EMILY TANIMURA, 2016. "A Degree-Distance-Based Connections Model with Negative and Positive Externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(2), pages 168-192, April.
    2. Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2011. "Nash Networks With Imperfect Reliability And Heterogeous Players," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 181-194.
    3. Pascal Billand & Christophe Bravard & Sudipta Sarangi & J. Kamphorst, 2011. "Confirming information flows in networks," Post-Print halshs-00672351, HAL.
    4. De Jaegher, K. & Kamphorst, J.J.A., 2015. "Minimal two-way flow networks with small decay," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 217-239.
    5. Cui, Zhiwei & Wang, Shouyang & Zhang, Jin & Zu, Lei, 2013. "Stochastic stability in one-way flow networks," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 410-421.

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    More about this item

    Keywords

    Network formation; two-way flow model; decay; non-linear benefits;
    All these keywords.

    JEL classification:

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

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