This is the author’s final draft of the paper published as International Journal of Game Theory, 2009, 38 (4), pp. 521-538. The original publication is available at www.springerlink.com, doi: 10.1007/s00182-009-0168-3.We model the formation of friendships as repeated cooperation within a set of heterogeneous players. The model is built around three of the most important facts about friendship: friends help each other, there is reciprocity in the relationship and people usually have only a few friends. In our results, we explain how similarity between people affects the friendship selection. We also characterize the long-run friendship network and illustrate how friendships emerge given the random process by which people meet each other
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