We study identification of the players’ preferences in a network formation game featuring complete information, nonreciprocal links, and a spillover effect. We decompose the network formation game into local games such that the network formation game is in equilibrium if and only if each local game is in equilibrium. This decomposition helps us prove equilibrium existence, reduce the number of moment inequalities characterising the identified set, and simplify the calculation of the integrals entering those moment inequalities. The developed methodology is used to investigate Italian firms’ incentives for having their executive directors sitting on competitors’ boards.
network formation; multiple equilibria; partial identification; board interlocks;
- D85: Network Formation and Analysis: Theory
- C57: Econometrics of Games
- L22: Firm Organization and Market Structure
- G34: Mergers • Acquisitions • Restructuring • Corporate Governance
Cristina Gualdani, “An Econometric Model of Network Formation with an Application to Board Interlocks between Firms”, TSE Working Paper, n. 17-898, March 2018, revised July 2019.
Cristina Gualdani, “An Econometric Model of Network Formation with an Application to Board Interlocks between Firms”, Journal of Econometrics, vol. 224, n. 2, October 2021, pp. 345–370.
Journal of Econometrics, vol. 224, n. 2, October 2021, pp. 345–370