Network Formation

The organization of individual agents into networks plays an important role in the determination of the outcome of many social and economic interactions. For instance, networks of personal contacts are important in obtaining information on goods and services, such as  information about products or job opportunities. Many commodities are traded through networks of buyers and sellers. Network formation models analyze the networks that are likely to be stable when agents are either nearsighted or farsighted. In addition, network formation allows us to investigate whether efficient networks - the ones that maximize the overall wealth – will emerge in the long run.

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