Designing weighted and directed networks under complementarities

• 成果类型: Article
• 署名作者: Li, Xueheng
• 署名单位: Sun Yat Sen University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2023.04.010
• 发表日期: 2023
• 页码: 556-574
• 关键词: Weighted and directed networks; Network games; COMPLEMENTARITY; Optimal network; Nested split graph; network formation

摘要

Strategic complementarities influence various social and economic activities. This study introduces a model to design a weighted and directed complementarity network to achieve a planner's objectives. The network represents the direction and intensity of complementarities between agents, influencing their best-responses to one another and determining equilibrium efforts. The planner's objective function can be convex, as commonly assumed in prior research, or arbitrarily concave to represent scenarios with diminishing marginal returns to each agent's effort. In all scenarios, optimal networks are generalized nested split graphs (GNSGs) which exhibit a link-dominance hierarchy among agents. These optimal networks are often strictly hierarchical, leading to inequality between ex ante identical agents. Additional analysis of a non-cooperative network formation game reveals that all decentralized equilibrium networks are inefficient GNSGs.(c) 2023 Elsevier Inc. All rights reserved.