Nestedness in Networks: A Theoretical Model and Some Applications

Yves Zenou, Michael Koenig and Claudio J. Tessone
Authors registered in the RePEc Author Service: Michael David König

No 8807, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: Bonacich centrality; Nested split graphs; Nestedness; Network formation (search for similar items in EconPapers)
JEL-codes: A14 C63 D85 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Nestedness in Networks: A Theoretical Model and Some Applications (2012)
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