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Network Formation with Heterogeneous Players

Galeotti, Andrea and Goyal, Sanjeev (2002) Network Formation with Heterogeneous Players. Working Paper. Tinbergen Institute Discussion Papers 02-069/1.

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Abstract

This paper studies network formation in settings where players are heterogeneous with respect to benefits as well as the costs of forming links. Our results demonstrate that centrality, center-sponsorship and short network diameter are robust features of equilibrium networks. We find that in a society with many groups, where it is cheaper to connect within groups as compared to across groups, strategic play by individuals leads to a network architecture in which there is a core group which is entirely internally connected while all the other groups are entirely externally linked and hence completely fragmented. Since internal/within group links are cheaper to form, this implies that individual incentives may generate a significant waste of valuable social resources.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Noncooperative games; Network formation; Heterogeneity
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Jul 2012 14:32
Last Modified: 16 Jul 2012 14:32
URI: http://repository.essex.ac.uk/id/eprint/2998

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