Core–periphery and nested networks emerging from a simple model of network formation

Norma Olaizola and Federico Valenciano

Mathematical Social Sciences, 2024, vol. 129, issue C, 42-51

Abstract: This paper studies a simple model inspired by the seminal connections model of Jackson and Wolinsky (1996). Node-players can invest in links to connect with other nodes forming networks, but only direct links transmit value. Nodes may have different values and different decreasing returns abilities/technologies to form/strengthen links. The strength of a link depends on the amounts invested in it by the two nodes that it connects and is determined by a separable function of the investments of the players which form the link. Nash-stable and efficient networks are characterized, and a variety of their architectures identified for different configurations of values and technologies.

Keywords: Networks; Network formation; Heterogeneity; Efficiency; Stability (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:42-51

DOI: 10.1016/j.mathsocsci.2024.03.003

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