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Title:Under-connected and over-connected networks PDF Logo
Authors:Buechel, Berno
Hellmann, Tim
Issue Date:2008
Series/Report no.:Working papers // Institute of Mathematical Economics 400
Abstract:Since the seminal contribution of Jackson & Wolinsky 1996 [A Strategic Model of Social and Economic Networks, JET 71, 44-74] it has been widely acknowledged that the formation of social networks exhibits a general conflict between individual strategic behavior and collective outcome. What has not been studied systematically are the sources of inefficiency. We approach this gap by analyzing the role of positive and negative externalities of link formation. We find general results that relate situations of positive externalities with stable networks that cannot be 'too dense' in a well-defined sense, while situations with negative externalities, tend to induce 'too dense' networks.
Network formation
Game theory
Persistent Identifier of the first edition:urn:nbn:de:hbz:361-13569
Document Type:Working Paper
Appears in Collections:Working Papers, Center for Mathematical Economics (IMW), Bielefeld University

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