Coordination Failures in Network Formation
(2005)working paper.Abstract
In this paper, we make an exploratory use of numerical techniques (genetic algorithms and Monte Carlo simulations) to compute efficient and stochastically stable networks in a spatialized version of the connections model of Jackson and Wolinski (1996). This approach allows us to observe and discuss the coordination failures that arise in a strategic network formation context with link-mediated positive externalities to connections and geographically based connection costs. Our result highlight that, depending on the strength of the externalities, emergent and efficient network may tend to share several structural properties. Nevertheless, in general, emergent networks have too few local and distant connections are are also too less ``coordinated'' around some central agents than they should.
Description
March 2008