Equilibria and centrality in link formation games

Hannu Salonen

International Journal of Game Theory, 2016, vol. 45, issue 4, No 17, 1133-1151

Abstract: Abstract We study non-cooperative link formation games in which players have to decide how much to invest in connections with other players. The relationship between equilibrium strategies and network centrality measures are investigated in games where there is a common valuation of players as friends. The utility from links is a weighted sum of Cobb–Douglas functions, the weights representing the common valuation. If the Cobb–Douglas functions are bilinear and the link formation cost is not too high, then indegree, eigenvector centrality, and the Katz–Bonacich centrality measure put the players in opposite order than the common valuation. The same result holds for non-negligible link formation costs if the Cobb–Douglas functions are separately concave but not jointly concave. If the Cobb–Douglas functions are strictly concave, then at the interior equilibrium these measures order the players in the same way as the common valuation.

Keywords: Link formation games; Centrality measures; Complete networks (search for similar items in EconPapers)
JEL-codes: C72 D43 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1007/s00182-015-0514-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Equilibria and Centrality in Link Formation Games (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jogath:v:45:y:2016:i:4:d:10.1007_s00182-015-0514-6

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/182/PS2

DOI: 10.1007/s00182-015-0514-6

Access Statistics for this article

International Journal of Game Theory is currently edited by Shmuel Zamir, Vijay Krishna and Bernhard von Stengel

More articles in International Journal of Game Theory from Springer, Game Theory Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().