We propose a model on strategic formation of communication networks with (i) link specificity: the more direct links somebody maintains, the less she can specify her attention per link, the lower her links’ value, while this negative externality was previously ignored in the communication context, and (ii) value transferability via indirect links for informational but not for social value from ...

A monopolist faces a partially uninformed population of consumers, interconnected through a directed social network. In the network, the monopolist offers rewards to informed consumers (influencers) conditional on informing uninformed consumers (influenced). Rewards are needed to bear a communication cost. We investigate the incentives for the monopolist to move to a denser network and the impa...

This paper reports results from a laboratory experiment on network formation among heterogeneous agents. The experimental design extends the Bala-Goyal (2000) model of network formation with decay and two-way flow of benefits by introducing agents with lower linking costs or higher benefits to others. Furthermore, agents’ types may be common knowledge or private information. In all treatments, ...

We analyze the problem of optimal monopoly pricing in social networks in order to characterize the influence of the network topology on the pricing rule. It is shown that this influence depends on the type of providers (local versus global monopoly) and of externalities (consumption versus price). We identify two situations where the monopolist does not discriminate across nodes in the network ...

Network formation among individuals constitutes an important part of many OR processes, but relatively little is known about how individuals make their linking decisions in networks. This article provides an investigation of heuristic effects in individual linking decisions for network formation in an incentivized lab-experimental setting. Our mixed logit analysis demonstrates that the inherent...

We establish a relationship between decay centrality and two widely used and computationally cheaper measures of centrality, namely degree and closeness. We show that for low values of the decay parameter the nodes with maximum decay centrality also have maximum degree, whereas for high values of the decay parameter they also maximize closeness. For intermediate values, we provide sufficient co...

What explains the large variation in the number of contacts (degree) that different participants of social networks have: age, randomness, or some unobservable fitness measure? To answer this question, I extend the model presented in Jackson and Rogers (2007) to allow individuals to vary in their ability to attract contacts. I estimate the parameters of the extended model, using a social networ...

We study the location-specific component in research productivity of economics and finance faculty who have ever been affiliated with the top 25 universities in the last three decades. We find that there was a positive effect of being affiliated with an elite university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. We decompose this university fixed effect and fi...

This paper studies the dynamics by which populations with heterogeneous preferences for local public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions may best facilitate efficient self-organization when residents are able to move freely between locations. I find that institutions requiring all residents of a community to pay equal ...

The architecture of social and economic networks is often explained in terms of the externalities shaping the link-forming incentives of players. We make two contributions to this literature. First, we bring into its ambit the linear-quadratic utility model. Since players’ utilities are now a function of their network centralities, this permits endogenizing their locational incentives in a netw...