Who's who in networks. Wanted: the key player

Coralio Ballester, Antoni Calvó-Armengol, Yves Zenou

Research output: Contribution to journalArticleResearchpeer-review

454 Citations (Scopus)

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 languageEnglish
Pages (from-to)1403-1417
Number of pages15
JournalEconometrica
Volume74
Issue number5
DOIs
Publication statusPublished - 1 Sep 2006
Externally publishedYes

Keywords

  • Centrality measures
  • Peer effects
  • Policies
  • Social networks

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