Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/43816
Authors: 
Year of Publication: 
2009
Series/Report no.: 
Working Papers No. 423
Publisher: 
Bielefeld University, Institute of Mathematical Economics (IMW), Bielefeld
Abstract: 
This paper studies the properties of convexity (concavity) and strategic complements (substitutes) in network formation and the implications for the structure of pairwise stable networks. First, different definitions of convexity (concavity) in own links from the literature are put into the context of diminishing marginal utility of own links. Second, it is shown that there always exists a pairwise stable network as long as the utility function of each player satisfies convexity in own links and strategic complements. For network societies with a profile of utility functions satisfying concavity in own links and strategic complements, a local uniqueness property of pairwise stable networks is derived. The results do neither require any specification on the utility function nor any other additional assumptions such as homogeneity.
Subjects: 
Networks
Network formation
Game theory
Supermodularity
Increasing differences
Stability
Existence
Uniqueness
JEL: 
D85
C72
L14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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