## Abstract

Finite population noncooperative games with linear-quadratic utilities, where each player decides how much action she exerts, can be interpreted as a network game with local payoff complementarities, together with a globally uniform payoff substitutability component and an own-concavity effect. For these games, the Nash equilibrium action of each player is proportional to her Bonacich centrality in the network of local complementarities, thus establishing a bridge with the sociology literature on social networks. This Bonacich-Nash linkage implies that aggregate equilibrium increases with network size and density. We then analyze a policy that consists of targeting the key player, that is, the player who, once removed, leads to the optimal change in aggregate activity. We provide a geometric characterization of the key player identified with an intercentrallty measure, which takes into account both a player's centrality and her contribution to the centrality of the others.

Original language | English |
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Pages (from-to) | 1403-1417 |

Number of pages | 15 |

Journal | Econometrica |

Volume | 74 |

Issue number | 5 |

DOIs | |

Publication status | Published - 1 Sep 2006 |

Externally published | Yes |

## Keywords

- Centrality measures
- Peer effects
- Policies
- Social networks