Friendship selection

We model the formation of friendships as repeated cooperation within a set of heterogeneous players. The model is built around three of the most important facts about friendship: friends help each other, there is reciprocity in the relationship and people usually have only a few friends. In our results, we explain how similarity between people affects the friendship selection. We also characterize the long-run friendship network and illustrate how friendships emerge given the random process by which people meet each other.