The Stability of Exchange Networks

Gonul Dooan, M.A.L.M. van Assen, Arnout van de Rijt and Vincent Buskens

No 9098, Coalition Theory Network Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: This paper develops a formal model of exchange network stability that combines expected value theory (Friedkin 1995) with the economic literature on network dynamics. We identify stable networks up to size 8 for varying costs and investigate whether they are Pareto efficient and egalitarian. Only a very small number of networks are stable. Odd cycles and networks consisting of dyads and at most one isolate are the only egalitarian, efficient, and stable networks for a large cost range. We show that some of these results are generalizable to networks of any size and are independent of using expected value theory.

Keywords: Institutional and Behavioral Economics; International Development (search for similar items in EconPapers)
Pages: 44
Date: 2007
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemct:9098

DOI: 10.22004/ag.econ.9098

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