tionships between them. Individuals in a society coordinate their activities by forming organizations such as businesses, clubs, churches, or government units. The relationships in a society include kinship, friendship, business transactions, and political, religious, ethnic, or cultural affinity groups. Thus, individuals can be part of a network as buyers and sellers, employers and employees, friends or family members, or members of organizations or interest groups. A substantial literature in sociology studies these social networks and considers economic relationships to be embedded in the underlying network of social relationships. According to Polanyi (1944, 46), "man's economy, as a rule, is submerged in his social relationships" (see also Granovetter 1973, 1985). See Wasserman and Faust (1994) for an introduction to social networks. They are related to networks used for communications (Monge and Contractor 2003). The Structure and Functions of Networks The application of graph theory and network design ideas to game theory is related to the theory of social networks. 3 Myerson (1977) uses ideas from graph theory to analyze cooperative games in which only some players can cooperate with others. These cooperation structures correspond to links in a transportation or communications network. Such cooperation structures necessarily place limits on the possible outcomes of a cooperative game, in contrast to a game in which any combination of players can interact and form coalitions. The strategic design of business networks appears in representations of markets in which players must interact through intermediaries. These intermediaries act as network organizers, bringing together buyers and sellers and reducing transaction costs (Spulber 1998, 1999). There is also a related set of studies of two-sided markets, in which buyers and sellers interact strategically through centralized communica- tion mechanisms (Caillaud and Jullien 2003; Rochet and Tirole 2003; Spulber 2006). Analysis of the study of business and soc