Open AccessNestedness in networks: A theoretical model and some applications
Author(s) -
König Michael D.,
Tessone Claudio J.,
Zenou Yves
Publication year - 2014
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te1348
Subject(s) - nestedness , centrality , computer science , network formation , stability (learning theory) , process (computing) , basis (linear algebra) , network model , theoretical computer science , dynamic network analysis , distributed computing , topology (electrical circuits) , mathematics , artificial intelligence , computer network , combinatorics , machine learning , ecology , habitat , biology , geometry , world wide web , operating system
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.