One-way flow network formation under constraints

We study the effects of institutional constraints on stability and efficiency in the “one-way flow” model of network formation. In this model the information that flows through a link between two players runs only towards the player that initiates and supports the link, so in order for it to flow in both directions, both players must pay whatever the unit cost of a directional link is. We assume that an exogenous “societal cover” consisting of a collection of possibly overlapping subsets covering the set of players specifies the social organization in different groups or “societies,” so that a player may initiate links only with players that belong to at least one society that he/she also belongs to, thus restricting the feasible strategies and networks. In this setting, we examine the impact of such societal constraints on stable/efficient architectures and on dynamics. Copyright Sociedad de Estadística e Investigación Operativa 2014