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The Stability of Exchange Networks

Author

Listed:
  • Gönül Dogan

    (Tilburg University)

  • M.A.L.M. van Assen

    (Tilburg University)

  • Arnout van de Rijt

    (Cornell University)

  • Vincent Buskens

    (Utrecht University)

Abstract

This paper develops a formal model of exchange network stability that combines expected value theory (Friedkin 1995) with the economic literature on network dynamics. We identify stable networks up to size 8 for varying costs and investigate whether they are Pareto efficient and egalitarian. Only a very small number of networks are stable. Odd cycles and networks consisting of dyads and at most one isolate are the only egalitarian, efficient, and stable networks for a large cost range. We show that some of these results are generalizable to networks of any size and are independent of using expected value theory.

Suggested Citation

  • Gönül Dogan & M.A.L.M. van Assen & Arnout van de Rijt & Vincent Buskens, 2007. "The Stability of Exchange Networks," Working Papers 2007.66, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2007.66
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    References listed on IDEAS

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    Cited by:

    1. Ettema, Dick & Schwanen, Tim, 2012. "A relational approach to analysing leisure travel," Journal of Transport Geography, Elsevier, vol. 24(C), pages 173-181.

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    More about this item

    Keywords

    Exchange Networks; Stability; Efficiency; Equity; Social Dilemma;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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