Rev. Econ. Design 5, 203 (2000)

c Springer-Verlag 2000


Editorial Special Issue on the Formation of Groups

When Murat Sertel approached us with the suggestion of organizing a special issue on the formation of groups and networks, we were happy to do so. This is a topic that is quite important in the function of many economic institutions. Examples where the organization of individuals into groups or networks plays an important role in determining social welfare include decentralized markets and trade, labor markets, internal organization of the firm, the internet, local production of public goods, communication networks, among many others. While how individuals are grouped or connected is clearly important to the operation and optimal design of many economic institutions, our understanding of exactly how such relationships matter is still under-developed. This realization has led to significant recent attention to this topic and presents a very rich research agenda. Despite the recent attention that the topics of group and network formation have received, we have been quite surprised by the response for this special issue. We received a much larger number of submissions than we had anticipated and have been able to put together two special issues which collect a number of insightful papers on the subject. The papers divide nicely into two issues by sub-topic. The first issue contains papers that focus on groupings of individuals where specific interconnections are not an issue. The second issue focuses on the formation of networks among individuals, where the pattern of interconnections among individuals is important. All of the papers have been carefully refereed and held to the standards for publication in the Review of Economic Design. Bhaskar Dutta, Indian Statistical Institute, New Delhi Matthew O. Jackson, California Institute of Technology, Pasadena, CA