FEEM working papers "Note di lavoro" series
2005 .040

Stochastic Stability in Network with Decay

Authors: Francesco Feri
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Keywords: Network,Decay,Strategical interaction
JEL n.: A14,D20,J00
JEL: Journal of Economic Theory
Pages: Vol. 135, Issue 1, pp. 442-457
Date: 07/2007


This paper considers a simple communication network characterized by an endogenous architecture and an imperfect transmission of information. We analyze the process of network formation in a dynamic framework where self - interested individuals can form or delete links and, occasionally, are doing mistakes. Then, using stochastic stability, we identify which network structures the formation process will converge to.

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