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Deutsches Institut für Wirtschaftsforschung (DIW), Berlin >
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http://hdl.handle.net/10419/18073
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| Title: | | Nash Networks with Heterogeneous Agents  |
| Authors: | | Haller, Hans Sarangi, Sudipta |
| Issue Date: | | 2003 |
| Series/Report no.: | | DIW-Diskussionspapiere 337 |
| Abstract: | | A non-cooperative model of network formation is developed. Agents form links with others based on the cost of the link and its assessed benefit. Link formation is one-sided, i.e., agents can initiate links with other agents without their consent, provided the agent forming the link makes the appropriate investment. Information flow is two-way. The model builds on the work of Bala and Goyal, but allows for agent heterogeneity. Whereas they permit links to fail with a certain common probability, in our model the probability of failure can be different for different links. We investigate Nash networks that exhibit connectedness and super-connectedness. We provide an explicit characterization of certain star networks. Efficiency and Pareto-optimality issues are discussed through examples. We explore alternative model specifications to address potential shortcomings. |
| JEL: | | D83 D82 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des DIW DIW-Diskussionspapiere
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