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Université de Fribourg

Under-connected and over-connected networks: the role of externalities in strategic network formation

Buechel, Berno ; Hellmann, Tim

In: Review of Economic Design, 2012, vol. 16, no. 1, p. 71–87

Since the seminal contribution of Jackson and Wolinsky (J Econ Theory 71(1):44–74, 1996) it has been widely acknowledged that the formation of social networks exhibits a general conflict between individual strategic behavior and collective outcome. What has not been studied systematically are the sources of inefficiency. We approach this omission by analyzing the role of positive and negative...