Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86778
Authors: 
Jaegher, K. De
Kamphorst, J.J.A.
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper 10-125/1
Abstract: 
This paper characterizes the set of equilibrium networks in the two-way flow model of network formation with small decay, and this for all increasing benefit functions of the players. We show that as long as the population is large enough, this set contains large- as well as small-diameter networks. For all benefit functions, the periphery-sponsored star is the most stable. When the marginal benefits of information are constant, all non-star networks are equally stable. With increasing marginal benefits of information, small-diameter networks in general tend to be more stable. However, with decreasing marginal benefits of information, large-diameter networks tend to be the most robust along with the periphery-sponsored star.
Subjects: 
Network formation
two-way flow model
decay
non-linear benefits
JEL: 
C72
D85
Document Type: 
Working Paper

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