Communication network formation with link specificity and value transferability

M.J.W. Harmsen - van Hout; P.J.J. Herings; B.G.C. Dellaert

doi:10.1016/j.ejor.2013.02.028

Communication network formation with link specificity and value transferability

M.J.W. Harmsen - van Hout^*, P.J.J. Herings^*, B.G.C. Dellaert^*

^*Corresponding author for this work

Microeconomics & Public Economics

Research output: Contribution to journal › Article › Academic › peer-review

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Abstract

We model strategic communication network formation with (i) link specificity: link maintenance lowers specific attention and thus value (negative externality previously ignored for communication) and (ii) value transferability via indirect links for informational but not for social value (positive externality modeled uniformly before). Assuming only social value, the pairwise stable set includes many nonstandard networks under high and particular combinations of complete components under low link specificity. Allowing for social and informational value reduces this set to certain fragmented networks under high and the complete network under low link specificity. These extremes are efficient, whereas intermediate link specificity generates inefficiency.

Original language	English
Pages (from-to)	199-211
Number of pages	13
Journal	European Journal of Operational Research
Volume	229
Issue number	1
DOIs	https://doi.org/10.1016/j.ejor.2013.02.028
Publication status	Published - 16 Aug 2013

Keywords

Bilateral communication links
Link specificity
Value transferability
Social vs. informational value
Strategic network formation
SOCIAL NETWORKS
TOPOLOGIES
EVOLUTION
MODEL

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10.1016/j.ejor.2013.02.028

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Cite this

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title = "Communication network formation with link specificity and value transferability",

abstract = "We model strategic communication network formation with (i) link specificity: link maintenance lowers specific attention and thus value (negative externality previously ignored for communication) and (ii) value transferability via indirect links for informational but not for social value (positive externality modeled uniformly before). Assuming only social value, the pairwise stable set includes many nonstandard networks under high and particular combinations of complete components under low link specificity. Allowing for social and informational value reduces this set to certain fragmented networks under high and the complete network under low link specificity. These extremes are efficient, whereas intermediate link specificity generates inefficiency.",

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year = "2013",

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AU - Harmsen - van Hout, M.J.W.

AU - Herings, P.J.J.

AU - Dellaert, B.G.C.

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AB - We model strategic communication network formation with (i) link specificity: link maintenance lowers specific attention and thus value (negative externality previously ignored for communication) and (ii) value transferability via indirect links for informational but not for social value (positive externality modeled uniformly before). Assuming only social value, the pairwise stable set includes many nonstandard networks under high and particular combinations of complete components under low link specificity. Allowing for social and informational value reduces this set to certain fragmented networks under high and the complete network under low link specificity. These extremes are efficient, whereas intermediate link specificity generates inefficiency.

KW - Bilateral communication links

KW - Link specificity

KW - Value transferability

KW - Social vs. informational value

KW - Strategic network formation

KW - SOCIAL NETWORKS

KW - TOPOLOGIES

KW - EVOLUTION

KW - MODEL

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DO - 10.1016/j.ejor.2013.02.028

M3 - Article

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JO - European Journal of Operational Research

JF - European Journal of Operational Research

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