original papers: A strategic analysis of network reliability

Venkatesh Bala and Sanjeev Goyal

Review of Economic Design, 2000, vol. 5, issue 3, 205-228

Abstract: We consider a non-cooperative model of information networks where communication is costly and not fully reliable. We examine the nature of Nash networks and efficient networks. We find that if the society is large, and link formation costs are moderate, Nash networks as well as efficient networks will be `super-connected' i.e. every link is redundant in the sense that the network remains connected even after the link is deleted. This contrasts with the properties of a deterministic model of information decay, where Nash networks typically involve unique paths between agents. We also find that if costs are very low or very high, or if links are highly reliable then there is virtually no conflict between efficiency and stability. However, for intermediate values of costs and link reliability, Nash networks may be underconnected relative to the social optimum.

Keywords: Networks; coordination games; communication (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2000-09-11
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Citations: View citations in EconPapers (55)

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