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A Strategic Model of Social and Economic Networks

Jackson, Matthew O. and Wolinsky, Asher (2003) A Strategic Model of Social and Economic Networks. In: Networks and Groups: Models of Strategic Formation. Studies in Economic Design. Springer , Berlin, pp. 23-49. ISBN 978-3-642-07719-7.

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We study the stability and efficiency of social and economic networks, when self-interested individuals can form or sever links. First, for two stylized models, we characterize the stable and efficient networks. There does not always exist a stable network that is efficient. Next, we show that this tension persists generally: to assure that there exists a stable network that is efficient, one is forced to allocate resources to nodes that are not responsible for any of the production. We characterize one such allocation rule: the equal split rule, and another rule that arises naturally from bargaining of the players.

Item Type:Book Section
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Jackson, Matthew O.0000-0001-9846-4249
Additional Information:© 2003 Springer-Verlag Berlin Heidelberg.
Series Name:Studies in Economic Design
Classification Code:JEL: A14; D20; J00
Record Number:CaltechAUTHORS:20200211-132206786
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:101226
Deposited By: Tony Diaz
Deposited On:11 Feb 2020 23:33
Last Modified:11 Feb 2020 23:33

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