How Farsightedness Affects Network Formation

Dominik Morbitzer; Vincent Buskens; Stephanie Rosenkranz; Werner Raub

doi:10.1515/auk-2014-0105

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How Farsightedness Affects Network Formation

Dominik Morbitzer , Vincent Buskens , Stephanie Rosenkranz and Werner Raub

Published/Copyright: February 11, 2016

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From the journal Analyse & Kritik Volume 36 Issue 1

Abstract

We develop a theoretical model of network formation where actors are limitedly farsighted. In this way we extend current models with a new set of micro-foundations. Computer simulations are used to predict the stable network structures that are likely to emerge under the new assumptions. The co-author model by Jackson/Wolinsky (1996) is used as an example. The co-author model formulates a tension between stability and efficiency when actors are myopic. Limitedly farsighted actors can overcome this tension but only if the network is small enough. Thus, changing the micro-foundations of the network formation model leads to new implications at the macro-level in the sense that different networks are predicted to be stable than for existing micro-foundations.

Published Online: 2016-02-11

Published in Print: 2014-05-01

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https://doi.org/10.1515/auk-2014-0105