The economic literatures on bounded rationality and on social networks stand to benefit from a closer relationship. Despite concerns about the cognitive demands of rational choice, models which explicitly account for the cognitive costs of decision making have yet to gain significant traction. I...

Finding a satisfactory way to represent individual decisions presents a challenge for economic models of social networks. I introduce a new solution concept, local Bayesian equilibrium, that allows us to capture strategic effects while gaining some of the tractability of simpler heurisitcs. The...

I propose a simple theory of strategic network formation that accounts for many empirical patterns. Three elements forge the theory: i) local linking benefits, ii) convex linking costs, and iii) swap-proofness, a new refinement of pairwise stability. If players agree about who is a more...