Games Played on Networks

This chapter studies games played on fixed networks. These games capture a wide variety of economic settings including local public goods, peer effects, and technology adoption. We establish a common analytical framework to study a wide game class. We unearth new connections between games in the literature and in particular between those with binary actions, like coordination and best-shot games, and those with continuous actions and linear best replies. We review and advance existing results by showing how they tie together within the common framework. We discuss the game-theoretic underpinnings of key notions including Bonacich centrality, maximal independent sets, and the lowest and largest eigenvalue. We study the interplay of individual heterogeneity and the network and we develop a new notion interdependence to analyze how a shock to one agent affects the action of another agent. We outline directions for future research. *Prepared for the Oxford Handbook on the Economics of Networks, Yann Bramoullé, Andrea Galeotti and Brian Rogers (Eds), Oxford University Press. Bramoullé: Aix-Marseille University (Aix-Marseille School of Economics), CNRS; Kranton: Duke University. For financial support, Rachel Kranton thanks the National Science Foundation and Yann Bramoullé thanks the European Research Council.