Limited Observation in Mutual Consent Networks

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Michael McBride
Keyword(s):  
Social Networks ◽  
Incomplete Information ◽  
Network Formation ◽  
Pairwise Stability ◽  
Network Ties ◽  
Network Formation Game ◽  
Formation Game ◽  
Stability Concept

This paper studies mutual consent social networks in which individuals imperfectly monitor others' network ties and have incomplete information about the benefits of network participation. I introduce the Conjectural Pairwise Stability concept, which generalizes Jackson and Wolinsky's (1996) Pairwise Stability concept to allow for limited observation, and apply it to a specific mutual consent network formation game. While limited observation generally leads to the existence of less efficient stable networks, I find that it can also lead to the existence of efficient stable networks. Moreover, stability restrictions considered in previous work lose their refining power as observation becomes more limited.

Stable Production Networks

2020 ◽  
Vol 22 (02) ◽  
pp. 2040006
Author(s):  
Manish Sarkhel ◽  
Nagarajan Krishnamurthy
Keyword(s):  
Network Formation ◽  
Industrial Clusters ◽  
Network Structures ◽  
Production Networks ◽  
Network Stability ◽  
Second Stage ◽  
Stable Production ◽  
Network Formation Game ◽  
Formation Game ◽  
Number Of Firms

One of the key features which promote growth of industrial clusters is collaboration among firms within such clusters. Collaboration among firms leads to the formation of networks. Stability of these networks is vital to the sustainability of the particular firms. In this paper, we model a supply chain network where a set of downstream firms (players) source inputs from upstream firms (players) who manufacture goods, add value to the products and resell them. The upstream firms produce identical goods and compete on quantities to sell these goods to the downstream firms. The upstream firms procure goods from the downstream firms and sell them. Additionally, upstream firms network among themselves so as to reduce their costs. We model this setting as a two-stage [Formula: see text]-player strategic network formation game. Firms decide their links before competing on quantities in the second stage of the game. Using the defined model, we derive equilibrium quantities and profits as a function of the network structure and number of firms. Following which we analyze the conditions under which different stable network emerge. Our analysis brings forth several interesting insights such as higher connections among downstream players lead to increased profits for upstream manufacturers. From the network stability perspective, we obtain the conditions under which regular, star, etc. network structures are pairwise and bilaterally stable. Furthermore, we also find the conditions under which core–periphery network structures emerge and are stable.

scholarly journals Homophily and Social Norms in Experimental Network Formation Games

Games ◽  
2018 ◽  
Vol 9 (4) ◽  
pp. 83
Author(s):  
Jasmina Arifovic ◽  
Giuseppe Danese
Keyword(s):  
Social Norms ◽  
Network Formation ◽  
Field Studies ◽  
The Other ◽  
Strategy Formulation ◽  
Network Formation Games ◽  
Network Formation Game ◽  
Profile Rating ◽  
Formation Game

Field studies of networks have uncovered a preference to befriend people we perceive as similar according to some dimensions of our identity (“homophily”). Lab studies of network formation games have found that adherence to social norms of reciprocity and inequity aversion are also drivers of network choices. No study so far has attempted to investigate the role of both homophily and social norms in a controlled environment. At the beginning of our experiment, each player fills in a personal profile. Each player then views the profile of all other players and expresses a degree of perceived similarity between his/her profile and the profile of the other player. At this point, a repeated network formation game ensues. We find that: (1) potential homophily considerations triggered by the profile rating task did not measurably change the players’ behavior compared to the baseline; (2) reciprocity plays a significant role in the formulation of the players’ strategies, in particular lowering the probability that the player naively best responds to the network observed in the previous period. We speculate that reciprocation of past choices might be a more “available” aid in strategy-formulation than considerations related to the similarity of the other players.

Sign in / Sign up

Export Citation Format

Share Document