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Choosing `Me' and `My Friends': Identity in a Non-Cooperative Network Formation Game with Cost Sharing

Dev, Pritha (2010): Choosing `Me' and `My Friends': Identity in a Non-Cooperative Network Formation Game with Cost Sharing.

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Abstract

This paper introduces the choice of identity characteristics, and, commitments to these characteristics, in a network formation model where links costs are shared. Players want to link to the largest group given that linking costs are decreasing (increasing) in commitments for same (different) identity. We study conditions under which these choices allow for networks with multiple identities. We find that whether the choice of identity itself gives any utility or not, there will be Nash networks featuring multiple identities. Moreover, if the choice of identity directly adds utility, networks with multiple identities will be efficient and survive the dynamic process.

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