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Nestedness in networks: a theoretical model and some applications


König, Michael D; Tessone, Claudio J; Zenou, Yves (2014). Nestedness in networks: a theoretical model and some applications. Theoretical Economics, 9(3):695-752.

Abstract

We develop a dynamic network formation model that can explain the observed nestedness in real-world networks. Links are formed on the basis of agents' centrality and have an exponentially distributed life time. We use stochastic stability to identify the networks to which the network formation process converges and find that they are nested split graphs. We completely determine the topological properties of the stochastically stable networks and show that they match features exhibited by real-world networks. Using four different network datasets, we empirically test our model and show that it fits well the observed networks.

Abstract

We develop a dynamic network formation model that can explain the observed nestedness in real-world networks. Links are formed on the basis of agents' centrality and have an exponentially distributed life time. We use stochastic stability to identify the networks to which the network formation process converges and find that they are nested split graphs. We completely determine the topological properties of the stochastically stable networks and show that they match features exhibited by real-world networks. Using four different network datasets, we empirically test our model and show that it fits well the observed networks.

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22 citations in Web of Science®
25 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Nestedness, Bonacich centrality, network formation, nested split graphs
Language:English
Date:September 2014
Deposited On:20 Jan 2015 12:50
Last Modified:26 Jan 2017 08:56
Publisher:Society for Economic Theory
ISSN:1555-7561
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.3982/TE1348
Official URL:http://www.econtheory.org/ojs/index.php/te/article/view/20140695

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