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On the difficulty of characterizing network formation with endogenous behavior

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  • Golub, Benjamin
  • Hsieh, Yu-Chi
  • Sadler, Evan

Abstract

Bolletta (2021) studies a model in which a network is strategically formed and then agents play a linear best-response investment game in it. The model is motivated by an application in which people choose both their study partners and their levels of educational effort. Agents have different one-dimensional types – private returns to effort. A main result claims that (pairwise Nash) stable networks have a locally complete structure consisting of possibly overlapping cliques: if two agents are linked, they are part of a clique composed of all agents with types between theirs. A counterexample shows that the claimed characterization is incorrect. We specify where the analysis errs and discuss implications for network formation models.

Suggested Citation

  • Golub, Benjamin & Hsieh, Yu-Chi & Sadler, Evan, 2024. "On the difficulty of characterizing network formation with endogenous behavior," Mathematical Social Sciences, Elsevier, vol. 129(C), pages 107-110.
    • Handle: RePEc:eee:matsoc:v:129:y:2024:i:c:p:107-110
    DOI: 10.1016/j.mathsocsci.2023.10.006
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    References listed on IDEAS

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