Nestedness in Networks: A Theoretical Model and Some Applications

Michael Koenig (), Claudio Tessone and Yves Zenou
Additional contact information
Michael Koenig: Stanford University
Claudio Tessone: Swiss Federal Institute of Technology Zurich
Authors registered in the RePEc Author Service: Michael David König

No 11-003, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: We develop a dynamic network formation model that can explain the observed nestedness in real-world networks. Links are formed on the basis of agents’ centrality and have an exponentially distributed life time. We use stochastic stability to identify the networks to which the network formation process converges and find that they are nested split graphs. We completely determine the topological properties of the stochastically stable networks and show that they match features exhibited by real-world networks. Using four different network datasets, we empirically test our model and show that it fits well the observed networks.

Keywords: Nestedness; Bonacich centrality; network formation; nested split graphs (search for similar items in EconPapers)
JEL-codes: A14 C63 D8 (search for similar items in EconPapers)
Date: 2012-01
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Nestedness in networks: A theoretical model and some applications (2014)
Working Paper: Nestedness in Networks: A Theoretical Model and Some Applications (2012)
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