This paper proposes a dynamic model of bargaining to analyze decentralized markets where buyers and sellers obtain information about past deals through their social network. There is a unique equilibrium outcome which depends crucially on the peripheral (least connected) individuals in each...

Abstract Individuals' cognitive knowledge of their social networks is affected by systematic biases. This paper investigates the role of the mean degree bias , i.e. the tendency to underestimate the number of connections of others, in determining the structure of stable networks. It develops a...