Network Formation With Endogenous Decay

Francesco Feri

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: This paper considers a model of economic network characterized by an endogenous architecture and frictions in the relations among agents as described in Bala and Goyal (2000). We propose a similar network model with the difference that frictions in the relations among agents are endogenous. Frictions are modeled as dependent on the result of a coordination game, played by every pair of directly linked agents and characterized by 2 equilibria: one efficient and the other risk dominant. The model has a multiplicity of equilibria and we produce a characterization of those are stochastically stable.

Keywords: Network; Decay; Strategic Interaction (search for similar items in EconPapers)
JEL-codes: A14 D20 J00 (search for similar items in EconPapers)
Pages: 37
Date: 2007-06
New Economics Papers: this item is included in nep-gth, nep-net and nep-soc
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Network Formation with Endogenous Decay (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2007-14

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