Network Games

In contexts ranging from public goods provision to information collection, a player’s well-being depends on his or her own action as well as on the actions taken by his or her neighbours. We provide a framework to analyse such strategic interactions when neighbourhood structure, modelled in terms of an underlying network of connections, affects payoffs. In our framework, individuals are partially informed about the structure of the social network. The introduction of incomplete information allows us to provide general results characterizing how the network structure, an individual’s position within the network, the nature of games (strategic substitutes vs. complements and positive vs. negative externalities) and the level of information shape individual behaviour and payoffs. © 2009 The Review of Economic Studies Limited.