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  1. Transactions on Internet Technology (TOIT)
  2. ACM Transactions on Internet Technology (TOIT) : Volume 15
  3. Issue 1(Special Issue on Foundations of Social Computing), February 2015
  4. Strategic Formation of Credit Networks
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ACM Transactions on Internet Technology (TOIT) : Volume 16
ACM Transactions on Internet Technology (TOIT) : Volume 15
Issue 4(Special Issue on Trust in Social Networks and Systems), December 2015
Issue 3, September 2015
Issue 2, June 2015
Issue 1(Special Issue on Foundations of Social Computing), February 2015
Net Neutrality: Discrimination, Competition, and Innovation in the UK and US
Strategic Formation of Credit Networks
Aggregate Characterization of User Behavior in Twitter and Analysis of the Retweet Graph
P2P-Based, Multi-Attribute Resource Discovery under Real-World Resources and Queries
Special Issue on Foundations of Social Computing: Enabling Social Applications via Decentralized Social Data Management
ACM Transactions on Internet Technology (TOIT) : Volume 14
ACM Transactions on Internet Technology (TOIT) : Volume 13
ACM Transactions on Internet Technology (TOIT) : Volume 12
ACM Transactions on Internet Technology (TOIT) : Volume 11
ACM Transactions on Internet Technology (TOIT) : Volume 10
ACM Transactions on Internet Technology (TOIT) : Volume 9
ACM Transactions on Internet Technology (TOIT) : Volume 8
ACM Transactions on Internet Technology (TOIT) : Volume 7
ACM Transactions on Internet Technology (TOIT) : Volume 6
ACM Transactions on Internet Technology (TOIT) : Volume 5
ACM Transactions on Internet Technology (TOIT) : Volume 4
ACM Transactions on Internet Technology (TOIT) : Volume 3
ACM Transactions on Internet Technology (TOIT) : Volume 2
ACM Transactions on Internet Technology (TOIT) : Volume 1

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Strategic Formation of Credit Networks

Content Provider ACM Digital Library
Author Wellman, Michael P. Dandekar, Pranav Goel, Ashish Wiedenbeck, Bryce
Copyright Year 2015
Abstract Credit networks are an abstraction for modeling trust among agents in a network. Agents who do not directly trust each other can transact through exchange of IOUs (obligations) along a chain of trust in the network. Credit networks are robust to intrusion, can enable transactions between strangers in exchange economies, and have the liquidity to support a high rate of transactions. We study the formation of such networks when agents strategically decide how much credit to extend each other. We find strong positive network formation results for the simplest theoretical model. When each agent trusts a fixed set of other agents and transacts directly only with those it trusts, all pure-strategy Nash equilibria are social optima. However, when we allow transactions over longer paths, the price of anarchy may be unbounded. On the positive side, when agents have a shared belief about the trustworthiness of each agent, simple greedy dynamics quickly converge to a star-shaped network, which is a social optimum. Similar star-like structures are found in equilibria of heuristic strategies found via simulation studies. In addition, we simulate environments where agents may have varying information about each others’ trustworthiness based on their distance in a social network. Empirical game analysis of these scenarios suggests that star structures arise only when defaults are relatively rare, and otherwise, credit tends to be issued over short social distances conforming to the locality of information. Overall, we find that networks formed by self-interested agents achieve a high fraction of available value, as long as this potential value is large enough to enable any network to form.
Starting Page 1
Ending Page 41
Page Count 41
File Format PDF
ISSN 15335399
e-ISSN 15576051
DOI 10.1145/2700058
Volume Number 15
Issue Number 1
Journal ACM Transactions on Internet Technology (TOIT)
Language English
Publisher Association for Computing Machinery (ACM)
Publisher Date 2015-03-12
Publisher Place New York
Access Restriction One Nation One Subscription (ONOS)
Subject Keyword Trust Credit networks Empirical game-theoretic analysis Strategic network formation
Content Type Text
Resource Type Article
Subject Computer Networks and Communications
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