Games Played on Networks

This chapter studies games played on fixed networks. These games capture a wide variety of economic settings, including local public goods, peer effects, and technology adoption. The chapter establishes a common analytical framework to study a wide game class. The authors review and advance existing results by showing how they tie together within the common framework. The chapter discusses the game-theoretic underpinnings of key notions including Bonacich centrality and the lowest and largest eigenvalue. The text discusses the interplay of individual heterogeneity and the network and develops a new notion—interdependence—to analyze how a shock to one agent affects the action of another agent.

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