Small World Networks with Segregation Patterns and Brokers

Edoardo Gallo
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Edoardo Gallo: University of Oxford

No 2009.34, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Many social networks have the following properties: (i) a short average distance between any two individuals; (ii) a high clustering coefficient; (iii) segregation patterns; the presence of (iv) brokers and (v) hubs. (i) and (ii) define a small world network. This paper develops a strategic network formation model where agents have heterogeneous knowledge of the network: cognizant agents know the whole network, while ignorant ones are less knowledgeable. For a broad range of parameters, all pairwise Nash (PN) networks have properties (i)-(iv). There are some PN networks with one hub. Cognizant agents have higher betweenness centrality: they are the brokers who connect different parts of the network. Ignorant agents cause the emergence of segregation patterns. The results are robust to varying the number of cognizant agents and to increasing the knowledge level of ignorant ones. An application shows the relevance of the results to assessing the welfare impact of an increase in network knowledge due to, e.g., improved access to social networking tools.

Keywords: Network; Cognitive Network; Small World; Broker; Segregation (search for similar items in EconPapers)
JEL-codes: C72 D85 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2009.34

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