On the Interaction between Small Decay, Agent Heterogeneity and Diameter of Minimal Strict Nash Networks in Two-way Flow Model

Banchongsan Charoensook

Annals of Economics and Finance, 2020, vol. 21, issue 2, 331-361

Abstract: This paper studies the roles of value heterogeneity, that is, agents are heterogeneous in terms of information values that they possess, in determining the shapes of two-way flow Strict Nash networks when a small amount of decay is present. I do so by extending the two-way flow network with small decay of De Jaegher and Kamphorst (J ECON BEHAV ORGAN, 2015). Results of this extension show that the effects of value heterogeneity resemble the effects of cost heterogeneity found in the literature. Another surprising finding is that value heterogeneity can extend diameters of Strict Nash networks without changing other properties.

Keywords: Network formation; Strict Nash network; Two-way flow network; Agent heterogeneity (search for similar items in EconPapers)
JEL-codes: C72 D85 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2020:v:21:i:2:charoensook

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