Structural holes in social networks
By Sanjeev Goyal, Fernando Vega-Redondo. Journal of Economics Theory, 2007
338 citations recorded by the source corpus.
We consider a setting where every pair of players that undertake a transaction (e.g. exchange goods or information) creates a unit surplus.A transaction can take place only if the players involved have a connection. If the connection is direct the two players split the surplus equally, while if it is indirect then intermediate players also get an equal share of the surplus. Thus, individuals form links with others to create surplus, to gain intermediation rents, and to circumvent others who are trying to become intermediary. Our analysis clarifies the interplay between these forces in the process of strategic network formation. First, we show that, in the absence of capacity constraints on links, it leads to the emergence of a star network where a single agent acts as an intermediary for all transactions and enjoys significantly higher payoffs. Second, we study the implications of capacity constraints in the ability of agents to form links. In this case, distances between players must be long, which induces players who are “far off” to connect in order to avoid paying large intermediation rents. A cycle network then emerges, payoffs being equal across all players.
Subfields: Management Science and Operations Research, Safety Research, Statistical and Nonlinear Physics
View Paper: https://www.semanticscholar.org/paper/e25f76414c3fd3d3fc3489615838c95e434788dd
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In Management Science and Operations Research
In Safety Research
In Statistical and Nonlinear Physics
Citations in the corpus
- Interbank Tiering and Money Center Banks (2010, neutral): “For instance, in some network formation games the pure star emerges as the unique equilibrium architecture (Bala and Goyal (2000), Goyal and Vega-Redondo (2007), Hojman and Szeidl (2008)); but since these theories cannot predict which node will form the center of the network, they must be regarded,…”
- Networks in Finance (2008, background): “…Gilles and Sarangi (2006) consider that individuals can change multiple relationships at the same time rather than just one at a time, while Goyal and Vega-Redondo (2007) go one step further by allowing pairs of individuals to coordinate on how they change relationships.7 Bloch and Jackson…”
- Dynamics of Networks if Everyone Strives for Structural Holes1 (2008, background): “Jackson and Wolinsky (1996), Bala and Goyal (2000), and Goyal and Vega-Redondo (2007) all identified as a stable network the “star,” a network in which one central actor brokers everyone else.”
- Social network analysis: foundations and frontiers on advantage. (2013, neutral): “Theoretical in stable “equilibrium” networks (Buskens & van de Rijt 2008, Dogan et al. 2009, Goyal & Vega-Redondo 2007, Kleinberg et al. 2008, Reagans & Zuckerman 2008, Ryall & Sorenson 2007).”