Network Formation with Heterogeneous Players
Andrea Galeotti () and
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Andrea Galeotti: Erasmus University Rotterdam
No 02-069/1, Tinbergen Institute Discussion Papers from Tinbergen Institute
This paper studies network formation in settings where players are heterogeneous with respect to benefits as well as the costs of forming links. Our results demonstrate that centrality, center-sponsorship and short network diameter are robust features of equilibrium networks. We find that in a society with many groups, where it is cheaper to connect within groups as compared to across groups, strategic play by individuals leads to a network architecture in which there is a core group which is entirely internally connected while all the other groups are entirely externally linked and hence completely fragmented. Since internal/within group links are cheaper to form, this implies that individual incentives may generate a significant waste of valuable social resources.
Keywords: Noncooperative games; Network formation; Heterogeneity (search for similar items in EconPapers)
JEL-codes: C72 C79 (search for similar items in EconPapers)
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Journal Article: Network formation with heterogeneous players (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20020069
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