Network formation under institutional constraints

Norma Olaizola () and Federico Valenciano

IKERLANAK from Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I

Abstract: We study the effects of institutional constraints on stability, efficiency and network formation. An exogenous "societal cover" consisting of a collection of possibly overlapping subsets covering the set of players specifies the social organization in different groups or "societies". It is assumed that a player may imitiate links only with players that belong to at least one society that she also belongs to, thus restricting the feasible strategies and networks. In this setting, we examine the impact of such societal constraints on stable/efficient architectures and on dynamics. We also study stability and stochastic stability in the presence of decay.

Keywords: network; stability; dynamics; decay; stochastic stability (search for similar items in EconPapers)
Date: 2011-05
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Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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