A hierarchical network formation model
Omid Atabati () and
MPRA Paper from University Library of Munich, Germany
We present a network formation model based on a particularly interesting class of networks in social settings, where individuals' positions are determined according to a topic-based or hierarchical taxonomy. In this game-theoretic model, players are located in the leaves of a complete b-ary tree as the seed network with the objective of minimizing their collective distances to others in the network. In the grid-based model of Even-Dar and Kearns , they demonstrate the existence of small diameter networks with the threshold of a = 2 where the cost of a new link depends on the distance between the two endpoints to the power of a. We show the appearance of small diameter equilibrium networks with the threshold of a = 1/4 in the hierarchical or tree-based networks. Moreover, the general set of equilibrium networks in our model are guaranteed to exist and they are pairwise Nash stable with transfers .
Keywords: Network formation; Hierarchical networks; Linking game (search for similar items in EconPapers)
JEL-codes: C79 D85 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-net and nep-soc
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