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(Correspondent: Wang Tianjian) Recently, the paper “Connecting Friends” authored by Assistant Professor Ding Sihua of our school has been published in Journal of Economic Theory (Volume 214, December 2023). This paper studies on a new model of network formation that focuses on the concept of “introduction”. In contrast to network formation mechanisms in other models, “introduction” is special in that two players cannot make a connection on their own, but rely on introductions from common neighbors to get connected. The paper considers when players have the motivation to make introductions for their neighbors in a matching process.

This paper considers a model where players with different ability levels are connected in a network. The players seek to match with someone they are linked to in the network (i.e., their neighbors), and they prefer high-ability neighbors over low-ability ones. The paper investigates whether a player will strategically introduce two unacquainted neighbors to each other to improve her own matching outcome. The paper finds that this is possible if (i) the player making the introduction is less capable than both of the neighbors she considers introducing, and (ii) there exists an even-length alternating path—a sequence of linked players that alternate between matching and not matching with the next player on the sequence—from one of the neighbors to the introducer. The characterization based on alternating paths arises because an introduction can trigger a chain of rematches along these paths. Then, the paper characterizes stable networks and efficient networks, and shows that stability and efficiency do not imply each other. Finally, this paper considers several extensions, such as alternative matching processes and incomplete information.

Journal of Economic Theory is a widely recognized authoritative journal in the field of theoretical economics. It is also a “level-A” foreign academic journal recognized by the economics discipline of our school.