Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103935
Authors: 
Gauer, Florian
Landwehr, Jakob
Year of Publication: 
2014
Series/Report no.: 
Working Papers, Center for Mathematical Economics 515
Abstract: 
We propose a random network model incorporating heterogeneity of agents and a continuous notion of homophily. Unlike the vast majority of the corresponding economic literature, we capture homophily in terms of similarity rather than equality of agents. We show that if links between similar agents are indeed more likely, our homophilous random network model exhibits clustering. Moreover, simulations indicate that the well-known small-world phenomenon is preserved even at high homophily levels. As a possible application we provide a stylized labor market model, where a firm can hire a worker via the social network.
Subjects: 
Random Graphs
Homophily
Clustering
Small-World Phenomenon
Network Formation
Labor Market Search
JEL: 
D85
J64
Z13
Document Type: 
Working Paper

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