caa a22 4500 605475970 CHVBK 20210128100354.0 cr unu---uuuuu 210128e20150601xx s 000 0 eng 10.1007/s00199-015-0858-y doi (NATIONALLICENCE)springer-10.1007/s00199-015-0858-y Dynamic network formation with incomplete information [Elektronische Daten] [Yangbo Song, Mihaela van der Schaar] How do networks form and what is their ultimate topology? Most of the literature that addresses these questions assumes complete information: agents know in advance the value of linking even with agents they have never met and with whom they have had no previous interaction (direct or indirect). This paper addresses the same questions under the much more natural assumption of incomplete information: agents do not know in advance—but must learn—the value of linking. We show that incomplete information has profound implications for the formation process and the ultimate topology. Under complete information, the network topologies that form and are stable typically consist of agents of relatively high value only. Under incomplete information, a much wider collection of network topologies can emerge and be stable. Moreover, even with the same topology, the locations of agents can be very different: An agent can achieve a central position purely as the result of chance rather than as the result of merit. All of this can occur even in settings where agents eventually learn everything so that information, although initially incomplete, eventually becomes complete. The ultimate network topology depends significantly on the formation history, which is natural and true in practice, and incomplete information makes this phenomenon more prevalent. Springer-Verlag Berlin Heidelberg, 2015 Network formation nationallicence Incomplete information nationallicence Dynamic network formation nationallicence Link formation nationallicence Formation history nationallicence Externalities nationallicence Song Yangbo Department of Economics, UCLA, 90095, Los Angeles, CA, USA aut van der Schaar Mihaela Department of Electrical Engineering, UCLA, 90095, Los Angeles, CA, USA aut Economic Theory Springer Berlin Heidelberg 59/2(2015-06-01), 301-331 0938-2259 59:2<301 2015 59 199 https://doi.org/10.1007/s00199-015-0858-y text/html Onlinezugriff via DOI BK010053 XK010053 XK010000 Metadata rights reserved Springer special CC-BY-NC licence nationallicence 1 research-article jats NATIONALLICENCE NATIONALLICENCE NL-springer NATIONALLICENCE 856 40 https://doi.org/10.1007/s00199-015-0858-y text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Song Yangbo Department of Economics, UCLA, 90095, Los Angeles, CA, USA aut NATIONALLICENCE 700 1- van der Schaar Mihaela Department of Electrical Engineering, UCLA, 90095, Los Angeles, CA, USA aut NATIONALLICENCE 773 0- Economic Theory Springer Berlin Heidelberg 59/2(2015-06-01), 301-331 0938-2259 59:2<301 2015 59 199