TY  - GEN
AB  - We propose a random network model incorporating heterogeneity of agents
and a continuous notion of homophily. Unlike the vast majority of the corresponding
economic literature, we capture homophily in terms of similarity
rather than equality by assuming that the probability of linkage between two
agents continuously decreases in the distance of their characteristics. A homophily
parameter directly determines the strength of this effect. As a main
result, we show that for any positive level of homophily our model exhibits
clustering, that is an increased probability of linkage given a common neighbor.
As opposed to this, the seminal Bernoulli Random Graph model à la
Erdős and Rényi (1959) is comprised as the limit case of no homophily. Moreover,
simulations indicate that, although the average distance between agents
increases in homophily, the well-known small-world phenomenon is preserved
even at high homophily levels. We finally provide a possible application in form
of a stylized labor market model, where a firm can hire a new employee via the
social network.
DA  - 2016
KW  - Random Graphs
KW  - Homophily
KW  - Clustering
KW  - Small-World Phenomenon
KW  - Network Formation
KW  - Labor Market Search
LA  - eng
PY  - 2016
SN  - 0931-6558
SP  - 42-
TI  - Continuous homophily and clustering in random networks
UR  - https://nbn-resolving.org/urn:nbn:de:hbz:361-29060002
Y2  - 2024-11-22T09:53:45
ER  -