Abstract

We develop a theoretical model of network formation where actors are limitedly farsighted. In this way we extend current models with a new set of micro-foundations. Computer simulations are used to predict the stable network structures that are likely to emerge under the new assumptions. The co-author model by Jackson/wolinsky (1996) is used as an example. The co-author model formulates a tension between stability and efficiency when actors are myopic. Limitedly farsighted actors can overcome this tension but only if the network is small enough. Thus, changing the micro-foundations of the network formation model leads to new implications at the macro-level in the sense that different networks are predicted to be stable than for existing micro-foundations.