Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70450
Authors: 
Mihm, Maximilian
Toth, Russell
Lang, Corey
Year of Publication: 
2009
Series/Report no.: 
CAE Working Paper 09-07
Abstract: 
We consider strategic interaction on a network of heterogeneous long-term relationships. The bilateral relationships are independent of each other in terms of actions and realized payoffs, and we assume that information regarding outcomes is private to the two parties involved. In spite of this, the network can induce strategic interdependencies between relationships, which facilitate efficient outcomes. We derive necessary and sufficient conditions that characterize efficient equilibria of the network game in terms of the architecture of the underlying network, and interpret these structural conditions in light of empirical regularities observed in many social and economic networks.
Subjects: 
network enforcement
private monitoring
small-worlds
triadic closure
JEL: 
D85
C73
D82
Document Type: 
Working Paper

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