Agent Rationality Behind Network Formation

Abstract

We search for agent behavior rules which lead to the emergence of social networks that exhibit empirically observed phenomena: small-world property, scale-free degree distribution and stability in time. We assume that agents form and sever links using a cost-benefit analysis. Agents receive benefit from own links and from links that their friends form. On the other hand, link formation, deletion and keeping is costly. We find that a simple model structure which relies only on convex cost of link upkeep leads to stable networks which exhibit the small-world property.

Keywords:

• networks
• network formation
• search
• small world

Notes on contributor

Marek Antosiewicz is currently pursuing his PhD in the Decision Analysis and Support Unit at the Warsaw School of Economics and working part time at the Institute for Structural Research, a Warsaw-based think tank. He received his MS in Quantitative Methods in Economics from the Warsaw School of Economics as well as a BS in Mathematics at the University of Warsaw.

Bogumił Kamiński is Head of Decision Analysis and Support Unit at the Warsaw School of Economics. He received his MS and PhD in Quantitative Methods in Economics from Warsaw School of Economics. Email: [email protected].