Olaizola, Norma and Valenciano, Federico (2021): Efficiency and stability in the connections model with heterogeneous node.

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Abstract
This paper studies the connections model (Jackson and Wolinsky, 1996) when nodes may have different values. It is shown that efficiency is reached by a strongly hierarchical structure that we call strong NSGnetworks: Nested Split Graph networks where the hierarchy or ranking of nodes inherent in any such network is consistent with the rank of nodes according to their value, perhaps leaving some of the nodes with the lowest values disconnected. A simple algorithm is provided for calculating these efficient networks. We also introduce a natural extension of pairwise stability assuming that players are allowed to agree on how the cost of each link is split and prove that stability in this sense for connected strong NSGnetworks entails efficiency.
Item Type:  MPRA Paper 

Original Title:  Efficiency and stability in the connections model with heterogeneous node 
English Title:  Efficiency and stability in the connections model with heterogeneous node 
Language:  English 
Keywords:  Networks, Connections model, Heterogeneity, Efficiency, Stability. 
Subjects:  A  General Economics and Teaching > A1  General Economics > A14  Sociology of Economics C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C72  Noncooperative Games D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D85  Network Formation and Analysis: Theory 
Item ID:  107797 
Depositing User:  Dr. Norma Olaizola 
Date Deposited:  18 May 2021 09:51 
Last Modified:  18 May 2021 09:51 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/107797 