MICRO THEORY: Dr Leonie Baumann (McGill University)

Anonymous Network Formation

Social connections provide various benefits, such as access to information, support, and collaboration, motivating individuals to form networks. However, in many social settings—like academic conferences or networking events—participants are initially strangers, making the networking process inherently anonymous and random. This paper incorporates anonymity into the canonical non-cooperative connections model (Bala and Goyal (2000)) to explore symmetric, mixed-strategy equilibria in network formation. We show that, for any trembling-hand perfect equilibrium, strategies can be interpreted as socialization effort and yield a random network, closely related to but distinct from classical Erdos–Renyi graphs. This provides a strategic microfoundation for random graphs. We fully characterize these equilibria and efficient networks for large populations as a function of connection costs.