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| Persitz, Dotan. |
| The heterogeneous connections model is a generalization of the homogeneous connections model of Jackson and Wolinsky (1996) in which the intrinsic value of each connection is set by a discrete, positive and symmetric function that depends solely on the types of the two end agents. Core periphery networks are defined as networks in which the agents' set can be partitioned into two subsets, one in which the members are completely connected among themselves and the other where there are no internal links. A two-type society is defined as "power based" if both types of agents prefer to connect to one of the types over the other, controlling for path length. An exhaustive analysis shows that core periphery networks, in which the "preferred" types are in the... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Network Formation; Heterogeneity; Pairwise Stability; Institutional and Behavioral Economics; D85; L14. |
| Ano: 2009 |
URL: http://purl.umn.edu/52338 |
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| Babus, Ana. |
| Modern banking systems are highly interconnected. Despite their various benefits, the linkages that exist between banks carry the risk of contagion. In this paper we investigate how banks decide on direct balance sheet linkages and the implications for contagion risk. In particular, we model a network formation process in the banking system. Banks form links order to reduce the risk of contagion. The network is formed endogenously and serves as an insurance mechanism. We show that banks manage to form networks that are resilient to contagion. Thus, in an equilibrium network, the probability of contagion is virtually 0. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Financial Stability; Network Formation; Contagion Risk; Financial Economics; C70; G21. |
| Ano: 2007 |
URL: http://purl.umn.edu/9100 |
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| Hiller, Timo. |
| This paper presents a game-theoretic model of network formation, which allows agents to enter bilateral alliances and to extract payoffs from enemies. Each pair of agents creates a surplus of one, which allies divide in equal parts. If agents are enemies, then the agent with more allies obtains a larger share of the surplus. I show that Nash equilibria are of two types. First, a state of utopia, where all agents are allies. Second, asymmetric equilibria, such that agents can be partitioned into sets of different size, where agents within the same set are allies and agents in different sets are enemies. These results stand in contrast to coalition formation games in the economics of conflict literature, where stable group structures are generally symmetric.... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Network Formation; Economics of Conflict; Contest Success Function; Structural Balance; International Relations; Environmental Economics and Policy; D86; D74. |
| Ano: 2011 |
URL: http://purl.umn.edu/108251 |
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| Ule, Aljaz; Goeree, Jacob K.; Riedl, Arno. |
| This paper reports results from a laboratory experiment on network formation among heterogeneous agents. The experimental design extends the Bala-Goyal (2000) model of network formation with decay and two-way flow of benefits by allowing for agents with lower linking costs or higher benefits to others. Furthermore, agents' types may be common knowledge or private information. In all treatments, the (efficient) equilibrium network has a "star" structure. With homogeneous agents, equilibrium predictions fail completely. In contrast, with heterogeneous agents stars frequently occur, often with the high-value or low-cost agent in the center. Stars are not born but rather develop: with a high-value agent, the network's centrality, stability, and efficiency all... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Network Formation; Experiment; Heterogeneity; Private Information; Institutional and Behavioral Economics; C72; C92; D82; D85. |
| Ano: 2007 |
URL: http://purl.umn.edu/9099 |
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| Fosco, Constanza; Mengel, Friederike. |
| We develop a simple model to study the coevolution of interaction structures and action choices in Prisoners’ Dilemma games. Agents are boundedly rational and choose both actions and interaction partners via payoff-based imitation. The dynamics of imitation and exclusion yields polymorphic outcomes under a wide range of parameters. Depending on the parameters of the model two scenarios can arise. Either there is “full separation” of defectors and cooperators, i.e. they are found in two different, disconnected components. Or there is “marginalization” of defectors, i.e. connected networks emerge with a center of cooperators and a periphery of defectors. Simulations confirm our analytical results and show that the share of cooperators increases with the... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Game Theory; Cooperation; Imitation Learning; Network Formation; Institutional and Behavioral Economics; C70; C73; D85. |
| Ano: 2009 |
URL: http://purl.umn.edu/50723 |
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