Limited Observation in Mutual Consent Networks

Michael McBride ()

The B.E. Journal of Theoretical Economics, 2006, vol. 6, issue 1, 31

Abstract: This paper studies mutual consent social networks in which individuals imperfectly monitor others' network ties and have incomplete information about the benefits of network participation. I introduce the Conjectural Pairwise Stability concept, which generalizes Jackson and Wolinsky's (1996) Pairwise Stability concept to allow for limited observation, and apply it to a specific mutual consent network formation game. While limited observation generally leads to the existence of less efficient stable networks, I find that it can also lead to the existence of efficient stable networks. Moreover, stability restrictions considered in previous work lose their refining power as observation becomes more limited.

Keywords: uncertainty; information; efficiency; observation (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (8)

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DOI: 10.2202/1534-5963.1314

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