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Erscheinungsjahr: 
2002
Schriftenreihe/Nr.: 
Tinbergen Institute Discussion Paper No. 02-069/1
Verlag: 
Tinbergen Institute, Amsterdam and Rotterdam
Zusammenfassung: 
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.
Schlagwörter: 
Noncooperative games
Network formation
Heterogeneity
JEL: 
C72
C79
Dokumentart: 
Working Paper
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