Strategic tie formation for long-term exchange relations

Theory and empirical research have established that repeated interactions foster cooperation in social dilemmas. These effects of repeated interactions are meanwhile well known. Given these effects, actors have incentives for strategic tie formation in social dilemmas: they have incentives to establish long-term relations involving repeated interactions. Perhaps surprisingly, models accounting for strategic tie formation are scarce. We introduce and analyze a new game-theoretic model that captures the well-known effects of repeated interactions, while simultaneously endogenizing the formation of long-term relations. We assume strict game-theoretic rationality as well as self-regarding preferences. We highlight the commitment feature of tie formation: through establishing a long-term relation, at cost, actors ensure that they would suffer themselves from future sanctions of own opportunism. This allows for mutually beneficial cooperation in the first place. Some extensions of the model are discussed

Social networks: Effects and formation

Social networks affect individual behavior as well as social phenomena resulting from behavior ('effects'). Also, when actors can choose with whom to interact, social networks themselves are shaped by behavior ('formation'). This chapter provides a selective overview of rigorous sociology on effects of social networks and their formation. We discuss two examples ('case studies'). One is on effects of exogenously given network characteristics, the other on endogenous network formation. Our examples highlight how micro-macro models account for effects and formation of social networks

Social networks

Social networks affect individual behavior as well as social phenomena. Conversely, when actors can choose with whom to interact, social networks are also themselves affected by individual behavior. This chapter provides an overview of two main classes of formal theoretical models for the analysis of network effects and network formation, namely, game-theoretic models and agent-based simulation models. We first discuss models in which networks are assumed to be exogenous and focus on network effects. More specifically, we focus on models predicting effects of social networks on behavior in social dilemmas. Second, we summarize main approaches to network formation and the dynamics of networks. Third, we review models on the co-evolution of networks and behavior that provide an integrated analysis of network formation and network effects, again focusing on social dilemma problems. The chapter ends with an evaluation of the state of the art of theoretical models for social networks, including open problems and suggestions for future research

Social dilemmas and cooperation

Social dilemmas (sometimes referred to as “problems of collective action”, “tragedy of the commons”, or “public goods problems”) are situations with strategically interdependent actors such that individually rational behavior leads to an outcome that is less desirable for each actor than had they cooperated. In this chapter, we provide an overview of models of social dilemmas and cooperation in social dilemmas that use game-theoretic tools. We first review examples of social dilemmas and formal modeling of such dilemmas. We distinguish between dilemmas that involve two actors and those that can involve more than two actors. We also discuss why the conceptualization of “social dilemma” is “theory dependent”. Second, we review mechanisms that can induce cooperation in social dilemmas. Cooperation of rational actors in a social dilemma requires that the dilemma is “embedded” in a more complex game. We discuss models for different types of embeddedness. The chapter likewise includes a sketch of models of cooperation based on social preferences and of simulation studies as an alternative to game-theoretic analysis