Nestedness in networks: A theoretical model and some applications

, D. (), Claudio J. Tessone and , ()
Additional contact information
, D.: Department of Economics, University of Zurich
Claudio J. Tessone: Department of Management, Technology, and Economics, ETH Zurich
,: Department of Economics, Stockholm University
Authors registered in the RePEc Author Service: Yves Zenou and Michael David König

Theoretical Economics, 2014, vol. 9, issue 3

Abstract: We develop a dynamic network formation model that can explain the observed nestedness in real-world networks. Links are formed on the basis of agents' centrality and have an exponentially distributed life time. We use stochastic stability to identify the networks to which the network formation process converges and find that they are nested split graphs. We completely determine the topological properties of the stochastically stable networks and show that they match features exhibited by real-world networks. Using four different network datasets, we empirically test our model and show that it fits well the observed networks.

Keywords: Nestedness; Bonacich centrality; network formation; nested split graphs (search for similar items in EconPapers)
JEL-codes: A14 C63 D85 (search for similar items in EconPapers)
Date: 2014-10-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (133)

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Related works:
Working Paper: Nestedness in Networks: A Theoretical Model and Some Applications (2012)
Working Paper: Nestedness in Networks: A Theoretical Model and Some Applications (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:1348

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