# 12-019/1 (2012-03-01)

Author(s)
Pascal Billand, Universite de Lyon, Universite Jean Monnet, Saint-Etienne, CNRS, GATE; Christophe Bravard, Universite de Lyon, Universite Jean Monnet, Saint-Etienne, CNRS, GATE; Jurjen Kamphorst, Erasmus University Rotterdam; Sudipta Sarangi, DIW Berlin and Louisiana State University
Keywords:
connections model, confirmation, two-way flow models
JEL codes:
C72, D85

Social networks, be it on the internet or in real life, facilitate information flows. We model this by giving agents incentives to link with others and receive information through those links. In many networks agents will value confirmation of the information they receive from others. Our paper analyzes the impact such a need for confirmation has on the social networks which are formed. We first study the existence of Nash equilibria and then characterize the set of strict Nash networks. Next, we characterize the set of strictly efficient networks and discuss the relationship between strictly efficient networks and strict Nash networks.