Page, Frank H., Wooders, Myrna Holtz and Kamat, Samir (2004) Farsightedly basic networks. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.702).

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Abstract

We make two main contributions to the theory of economic and social network formation. First, we introduce the notion of a network formation network or a supernetwork. Supernetworks provide a framework in which we can formally define and analyze farsightedness in network formation. Second, we introduce a new notion of equilibrium corresponding to farsightedness. In particular, we introduce the notion of a farsightedly basic network, as well as the notion of a farsighted basis, and we show that all supernetworks possess a farsighted basis. A farsightedly basic network contained in the farsighted basis of a given supernetwork represents a possible final resting point (or absorbing state) of a network formation process in which agents behave farsightedly. Given the supernetwork representation of the rules governing network formation and the preferences of the individuals, a farsighted basis contains networks which are likely to emerge and persist if individuals behave farsightedly.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HM Sociology
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Business networks, Organizational sociology, Economics -- Sociological aspects, Organizational behavior, Social stability
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Official Date:	July 2004
Dates:	Date Event July 2004 Published
Number:	No.702
Number of Pages:	23
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access (Creative Commons)
Description:	Original version, July 2001, this version, July 2004.
Version or Related Resource:	Page, F.H., Wooders, M.H. and Kamat, S. (2003). Networks and farsighted stability. [Coventry] : University of Warwick, Economics Department. (Warwick economic research papers, no.689).

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