Equilibria and centrality in link formation games

We study non-cooperative link formation games in which players have to decide how much to invest in connections with other players. The relationship between equilibrium strategies and network centrality measures are investigated in games where there is a common valuation of players as friends. The u...

Full description

Saved in:
Bibliographic Details
Published in:International journal of game theory 2016-11, Vol.45 (4), p.1133-1151
Main Author: Salonen, Hannu
Format: Article
Language:English
Subjects:
Behavioral/Experimental Economics
Costs
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Eigenvectors
Equilibrium
Game Theory
Operations Research/Decision Theory
Original Paper
Production functions
Social and Behav. Sciences
Socialization
Studies
Utility functions
Valuation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We study non-cooperative link formation games in which players have to decide how much to invest in connections with other players. The relationship between equilibrium strategies and network centrality measures are investigated in games where there is a common valuation of players as friends. The utility from links is a weighted sum of Cobb–Douglas functions, the weights representing the common valuation. If the Cobb–Douglas functions are bilinear and the link formation cost is not too high, then indegree, eigenvector centrality, and the Katz–Bonacich centrality measure put the players in opposite order than the common valuation. The same result holds for non-negligible link formation costs if the Cobb–Douglas functions are separately concave but not jointly concave. If the Cobb–Douglas functions are strictly concave, then at the interior equilibrium these measures order the players in the same way as the common valuation.
ISSN:0020-7276
1432-1270
DOI:10.1007/s00182-015-0514-6