Strategic Reasoning about Network Formation Scenarios
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Most formal models of network formation posit simple reflexive or myopic behavior on the part of nodes forming connections or selecting local states. Accounting for more sophisticated or forward-looking behavior typically results in a game complicated to a degree precluding tractable analysis, absent heroic simplifying assumptions. We tackle complex network-formation scenarios with an empirical computational approach, combining simulation with game-theoretic reasoning to evaluate hypotheses about the consequences of strategic behavior. Empirical game-theoretic analyses of credit network formation and information cascades illustrate the approach.