A BEJTE Advances article.

Abstract

This paper studies mutual consent social networks in which individuals imperfectly monitor others' network ties and have incomplete information about the benefits of network participation. I introduce the Conjectural Pairwise Stability concept, which generalizes Jackson and Wolinsky's (1996) Pairwise Stability concept to allow for limited observation, and apply it to a specific mutual consent network formation game. While limited observation generally leads to the existence of less efficient stable networks, I find that it can also lead to the existence of efficient stable networks. Moreover, stability restrictions considered in previous work lose their refining power as observation becomes more limited.

Submitted: May 18, 2006 · Accepted: July 24, 2006 · Published: August 4, 2006

Originally published in Advances in Theoretical Economics.

Recommended Citation

McBride, Michael (2006) "Limited Observation in Mutual Consent Networks," Advances in Theoretical Economics: Vol. 6 : Iss. 1, Article 3.
Available at: http://www.bepress.com/bejte/advances/vol6/iss1/art3