Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/86781 
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 11-072/1
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
Agents involved in the formation of a social or economic network typically face uncertainty about the benefits of creating a link. However, the interplay of such uncertainty and risk attitudes has been neglected in the network formation literature. We propose a dynamic network formation model that builds on standard microeconomic concepts of utility maximization, incomplete information, and risk aversion. The model predicts that an agent's risk aversion is correlated with her network clustering coefficients, but not with her degree. We discover a mechanism that generates a correlation between network position and payoffs of individuals. Moreover, we show how the generated network architecture depends on the uncertainty in the environment it is embedded in.
Subjects: 
Network formation
risk aversion
clustering coefficient
local/global search
JEL: 
D85
D81
D83
Document Type: 
Working Paper

Files in This Item:
File
Size
577.3 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.