Nestedness in networks: a theoretical model and some applications

Michael D Konig, Claudio J Tessone, Yves Zenou

Research output: Contribution to journalArticleResearchpeer-review

71 Citations (Scopus)

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 lifetime. 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 data sets, we empirically test our model and show that it fits well the observed networks.
Original languageEnglish
Pages (from-to)695-752
Number of pages58
JournalTheoretical Economics
Volume9
Issue number3
DOIs
Publication statusPublished - Sep 2014
Externally publishedYes

Keywords

  • nestedness
  • Bonacich centrality
  • network formation
  • nested split graphs

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