On the difficulty of characterizing network formation with endogenous behavior

Benjamin Golub, Yu-Chi Hsieh and Evan Sadler

Mathematical Social Sciences, 2024, vol. 129, issue C, 107-110

Abstract: Bolletta (2021) studies a model in which a network is strategically formed and then agents play a linear best-response investment game in it. The model is motivated by an application in which people choose both their study partners and their levels of educational effort. Agents have different one-dimensional types – private returns to effort. A main result claims that (pairwise Nash) stable networks have a locally complete structure consisting of possibly overlapping cliques: if two agents are linked, they are part of a clique composed of all agents with types between theirs. A counterexample shows that the claimed characterization is incorrect. We specify where the analysis errs and discuss implications for network formation models.

Keywords: Network formation; Peer effects; Network games; Homophily (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:129:y:2024:i:c:p:107-110

DOI: 10.1016/j.mathsocsci.2023.10.006

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