Network formation with endogenous link strength and decreasing returns to investment

DOI10.3390/G7040040MaRDI QIDQ725068zbMATH OpenOpenAlexFDO

Authors Chiu Ki So

Publication date 1 August 2018

Published in Games (Search for Journal in Brave)

Copyright license Creative Commons Attribution 4.0 International

Full work available at URL https://doi.org/10.3390/g7040040

zbMATH Keywords

decreasing returnsendogenous link strengthnetwork formationsmall-world network

Mathematics Subject Classification ID

Small world graphs, complex networks (graph-theoretic aspects) (05C82) Deterministic network models in operations research (90B10) Social networks; opinion dynamics (91D30)

Review text

Summary: We study the formation of networks where agents choose how much to invest in each relationship. The benefit that an agent can derive from a network depends on the strength of the direct links between agents. We assume that the strength of the direct link between any pair of agents is a concave function of their investments towards each other. In comparison with some existing models of network formation where the strength technology is a convex function of investment, we find that (i) the symmetric complete network can dominate the star architecture in terms of total utility; (ii) a dominating symmetric complete network needs not be stable; and, (iii) star and complete networks can be dominated by small-world networks.

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Cites work

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Cited in

(9)

• Endogenous link strength in directed communication networks
• Communication networks with endogenous link strength
• Link investment substitutability: a factor influencing network formation
• Endogenous network production functions with selectivity
• Network formation under negative degree-based externalities
• Core-periphery and nested networks emerging from a simple model of network formation
• On the difficulty of characterizing network formation with endogenous behavior
• Efficiency in the two-way connections model
• Network formation under cumulative advantage: Evidence from the Cambridge high-tech cluster

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