We investigate the trade-off between the risk-sharing gains enjoyed by more interconnected firms and the costs resulting from an increased risk exposure. We find that when the shock distribution displays “fat” tails, extreme segmentation into small components is optimal, while minimal segmentation and high density of connections are optimal when the distribution exhibits “thin” tails. For less ...

We analyze a multi-period entry game among privately informed agents who differ with respect to the number of agents who must enter in order for their own entry to be profitable. In each period agents who have not yet joined decide whether to subscribe to a network. There exists a unique equilibrium that approximates any symmetric equilibrium arbitrarily closely as the discount factor approache...

This paper introduces a partner heterogeneity assumption in the one-way flow model of Bala and Goyal (2000, [1]). Our goal consists in the characterization of strict Nash networks with regard to the set of resources obtained by players. We use the notion of condensation network which allows us to divide the population in sets of players who obtain the same resources and we order these sets acco...

We show that although the prominent centrality measures in network analysis make use of different information about nodes’ positions, they all process that information in a very restrictive and identical way. They all spring from a common family that are characterized by the same axioms. In particular, they are all based on a additively separable and linear treatment of a statistic that capture...

We focus on the crucial role of network architecture in the defence against targeted attacks. A two-stage strategic game between a network designer and a network disruptor is analyzed. Given a set of nodes, the designer builds a network by investing in costly links. In the second stage, the disruptor deletes (possibly in a costly way) some of the links or nodes to reduce the designer’s benefit ...

In this paper, we show that a concept of aggregation can hold in network games. Breaking up large networks into smaller pieces, which can be replaced by representative players, leads to a coarse-grained description of strategic interactions. This method of summarizing complex strategic interactions by simple ones can be applied to compute Nash equilibria. We also provide an application to publi...

The best shot game applied to networks is a discrete model of many processes of contribution to local public goods. It generally has a wide multiplicity of equilibria that we refine through stochastic stability. We show that, depending on how we define perturbations – i.e., possible mistakes that agents make – we can obtain very different sets of stochastically stable states. In particular and ...

I examine a model in which two competing groups offer different allocation rules that may depend on the network of connections among the individuals that make up each group. I assume the existence of a single divisible good, such as a monetary prize, to be divided by each group. The probability of winning the prize will depend on the group sizes, but I examine a more general contest function as...

We consider strategic interaction on a network of heterogeneous long-term relationships. The bilateral relationships are independent of each other in terms of actions and realized payoffs, and we assume that information regarding outcomes is private to the two parties involved. In spite of this, the network can induce strategic interdependencies between relationships, which facilitate efficient...

We present a new approach for the empirical investigation of agglomeration patterns. We examine the clustering of manufacturing firms by identifying patterns of spatial network formation that deviate from randomly generated networks. Using firm-level panel data from Vietnam we calculate transitivity, a measure to determine the strength of clustering of manufacturing firms. We then test whether ...