Coordination failures in network formation

Nicolas Carayol (), Pascale Roux () and Murat Yildizoglu ()

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg

Abstract: In this paper, we make an exploratory use of numerical techniques (genetic algorithms and Monte Carlo simulations) to compute efficient and emergent networks in a spatialized version of the connections model of Jackson and Wolinski (1996). This approach allows us to observe and discuss the coordination failures that arise in a strategic network formation context with link-mediated positive externalities to connections and geographically based connection costs. Our results highlight that, depending on the strength of the externalities, emergent and efficient networks may share several structural properties. Nevertheless, emergent networks have too few local and distant connections and are also too less “coordinated” around some central agents than they should.

Keywords: Strategic Network Formation; Efficiency; Stability; Coordination; Small Worlds; Genetic Algorithms; Monte Carlo Simulations. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-cse, nep-gth, nep-net and nep-soc
Date: 2006
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Persistent link: http://EconPapers.repec.org/RePEc:ulp:sbbeta:2006-03

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