Homophily and segregation in social networks when individuals are limitedly forward-looking
(2020)
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- Abstract
- Network formation models are enjoying growing favour in studying social and economic behaviour of human beings. This is not only because network structures are omnipresent in our everyday life, but also because it has its own merits in modeling the real world issues. In this doctoral thesis, we provide two distinct solution concepts taking credibility of deviations into consideration, and apply them to a version of friendship model (de Marti and Zenou, 2017). In Chapter 1, we give a general introduction of the three chapters in this thesis. In Chapter 2, we study the stability of networks with a heterogeneous population. We show that, when mixing with myopic and farsighted players, the tension between stability and efficiency could vanish. Furthermore, we provide conditions on the utility function that guarantee the existence of a myopic-farsighted stable set. In Chapter 3, we introduce the coalition-proof stability which is immune to credible group deviations only. We discuss the difference between coalition-proof stability and other stability/non-cooperative equilibrium concepts and show that under component-wise egalitarian utility function, the coalition-proof stable network coincides with the strongly stable network, which are both efficient. In Chapter 4, we expand de Marti and Zenou's (2017) friendship model with a second-dimensional heterogeneity to address the segregation problems. We show that once the population is mixed with farsighted players and myopic players, most inefficient friendship networks tend to be destabilized. Farsightedness helps to alleviate the tension between efficiency and stability in friendship networks when players belong to different communities.
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Luo, C. (2020). Homophily and segregation in social networks when individuals are limitedly forward-looking. https://hdl.handle.net/2078.5/98726