Seminarios académicos y conferencias
Pairwise stability and private information in the coauthor model
8 Septiembre 2015 - 17 hrs.
Sala 209, Facultad de Ciencias Económicas y Administrativas UC
Abstract: This paper studies how private information affects the pairwise stability of networks in the co-author model. I assume that the nodes have incomplete information with respect to unlinked nodes and complete information with respect to linked nodes. A node’s incentive to form a link is increasing in its type if, and only if, the increase of the magnitude of the negative externality induced by a new link is small relative to the benefit of a new interaction. This occurs because a node’s type only affects its incentive to form a link through the interaction and not through the direct effect of a new link. Also, a node’s incentive to form a new link is decreasing in each of the neighbors’ types. This occurs because the negative externality of a new link is increasing in the neighbors types. Adding information can increase or reduce a node’s incentives to form new links. Therefore, adding information can maintain or undermine the stability of a network. I use these results to provide necessary and sufficient conditions on the type profile so that a star network is pairwise stable under private information and not under complete information.