What Goes Around Comes Around: A Theory of Indirect Reciprocity in Networks
Russell Toth and
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Maximilian Mihm: Cornell University
Corey Lang: Cornell University
Working Papers from Cornell University, Center for Analytic Economics
We consider strategic interaction on a network of heterogeneous long-term relationships. The bilateral relationships are independent of each other in terms of actions and realized payoffs, and we assume that information regarding outcomes is private to the two parties involved. In spite of this, the network can induce strategic interdependencies between relationships, which facilitate efficient outcomes. We derive necessary and sufficient conditions that characterize efficient equilibria of the network game in terms of the architecture of the underlying network, and interpret these structural conditions in light of empirical regularities observed in many social and economic networks.
JEL-codes: C73 D82 D85 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth, nep-net and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:corcae:09-07
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