I present a behavioural model of network formation with positive network externalities in which individuals have preferences for being part of a clique. The behavioural model leads to an associated supermodular (Topkis, 1979) normal form game. I show that the behavioural model converges to the...

I look at the equilibrium effects of homophily in network formation games having positive externalities. I show that very weak preferences for network effects (such as preference for being part of a clique) may result in very high levels of homophily at equilibrium. I present an empirical...