Stable and Efficient Structures in Multigroup Network Formation

Document pages: 13 pages

Abstract: In this work we present a strategic network formation model predicting theemergence of multigroup structures. Individuals decide to form or remove linksbased on the benefits and costs those connections carry; we focus on bilateralconsent for link formation. An exogenous system specifies the frequency ofcoordination issues arising among the groups. We are interested in structuresthat arise to resolve coordination issues and, specifically, structures inwhich groups are linked through bridging, redundant, and co-membershipinterconnections. We characterize the conditions under which certain structuresare stable and study their efficiency as well as the convergence of formationdynamics.