Structural Holes in Social Networks with Exogenous Cliques

Abstract

[eng] It has been empirically shown that structural holes in social networks enable potential large benefits to those individuals who bridge them (Burt, 2004). The work in Goyal and Vega-Redondo (2007) shows that the large payoff differentials caused by structural holes can persist even when agents strategically add and remove ties to smooth those differentials, thereby providing a game-theoretic rationale for the existence of bridge-agents. The present paper ties back to the initial empirical literature by explicitly assuming that agents are exogenously linked forming cliques, as in a firm environment. In this setting, bridge-agents cannot be sustained under the same conditions of Goyal and Vega-Redondo (2007). Instead, they can be sustained when the deviation possibilities are restricted and only when they connect small groups of agents to the rest.