Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150235
Authors: 
Zenou, Yves
König, Michael D.
Tessone, Claudio J.
Year of Publication: 
2014
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 9 [Year:] 2014 [Issue:] 3 [Pages:] 695-752
Abstract: 
We develop a dynamic network formation model that can explain the observed nestedness in real-world networks. Links are formed on the basis of agents' centrality and have an exponentially distributed life time. We use stochastic stability to identify the networks to which the network formation process converges and find that they are nested split graphs. We completely determine the topological properties of the stochastically stable networks and show that they match features exhibited by real-world networks. Using four different network datasets, we empirically test our model and show that it fits well the observed networks.
Subjects: 
Nestedness
Bonacich centrality
network formation
nested split graphs
JEL: 
A14
C63
D85
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Article

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