nep-net New Economics Papers
on Network Economics
Issue of 2006‒07‒21
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Bounded Rationality and Repeated Network Formation By Nicolas Querou; Sylvain Beal
  2. Eight Degrees of Separation By Paolo Pin
  3. Quality-improving alliances in differentiated oligopoly By Frédéric Deroian; Frédéric Gannon
  4. Visibility & Invisibility of Communities in Urban Systems By Paula Mota Santos; João Borges de Sousa
  5. A Limit Theorem for Systems of Social Interactions By Ulrich Horst; Jos´e A. Scheinkman

  1. By: Nicolas Querou (Queen's University Belfast); Sylvain Beal (CREUSET, University of Saint-Etienne)
    Abstract: We define a finite-horizon repeated network formation game with consent, and study the differences induced by different levels of individual rationality. We prove that perfectly rational players will remain unconnected at the equilibrium, while nonempty equilibrium networks may form when, following Neyman (1985), players are assumed to behave as finite automata. We define two types of equilibria, namely the Repeated Nash Network (RNN), in which the same network forms at each period, and the Repeated Nash Equilibrium (RNE), in which different networks may form. We state a sufficient condition under which a given network may be implemented as a RNN. Then, we provide structural properties of RNE. For instance, players may form totally different networks at each period, or the networks within a given RNE may exhibit a total order relationship. Finally we investigate the question of efficiency for both Bentham and Pareto criteria.
    Keywords: Repeated Network Formation Game, Two-sided Link Formation Costs, Bounded Rationality, Automata
    JEL: C72
    Date: 2006–05
  2. By: Paolo Pin (Università Ca’Foscari Venezia)
    Abstract: The paper presents a model of network formation where every connected couple gives a contribution to the aggregate payoff, eventually discounted by their distance, and the resources are split between agents through the Myerson value. As equilibrium concept we adopt a refinement of pairwise stability. The only parameters are the number N of agents and a constant cost k for every agent to maintain any single link. This setup shows a wide multiplicity of equilibria, all of them connected, as k ranges over non trivial cases. We are able to show that, for any N, when the equilibrium is a tree (acyclical connected graph), which happens for high k, and there is no decay, the diameter of such a network never exceeds 8 (i.e. there are no two nodes with distance greater than 8). Adopting no decay and studying only trees, we facilitate the analysis but impose worst–case scenarios: we conjecture that the limit of 8 should apply for any possible non–empty equilibrium with any decay function.
    Keywords: Network Formation, Myerson Value
    JEL: D85
    Date: 2006–05
  3. By: Frédéric Deroian (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - [Université de la Méditerranée - Aix-Marseille II][Université de droit, d'économie et des sciences - Aix-Marseille III] - [Ecole des Hautes Etudes en Sciences Sociales]); Frédéric Gannon (EconomiX - [CNRS : UMR7166] - [Université de Paris X - Nanterre])
    Abstract: Abstract: We study rival firms' incentives in quality-improving Research and Development (R&D) networks. The analysis stresses the role of free riding associated to collaboration and three major consequences emerge: R&D efforts decrease with the number of partners, networks of alliances are over-connected as compared to the social optimum and the profitmaximizing number of alliances is possibly non monotonic (decreasing then increasing) with respect to inverse measure of product differentiation.
    Keywords: and horizontally Differentiated Oligopoly, Product Innovation, R&D, Alliance
    Date: 2006–07–10
  4. By: Paula Mota Santos (University Fernando Pessoa); João Borges de Sousa (Porto University)
    Abstract: Information on the presence of Chinese and Ukrainian communities in Portugal, and namely in Greater Porto (northern Portugal) will be presented to then investigate how recent work on evolving networks might be a helpful tool in analysing the integration of migrant communities in urban systems, namely in helping to understand if the differential relationships between ‘nodes’ and ‘vertices’ might help to account for the higher and lesser visibility of these two communities within Greater Porto.
    Keywords: Chinese, Ukrainian, Migrant Communities, Self Evolving Networks
    JEL: O15 O18 Z13
    Date: 2006–04
  5. By: Ulrich Horst; Jos´e A. Scheinkman
    Date: 2006–07–15

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