  We propose a novel network formation game that explains the emergence of
various hierarchical structures in groups where self-interested or
utility-maximizing individuals decide to establish or severe relationships of
authority or collaboration among themselves. We consider two settings: we first
consider individuals who do not seek the other party's consent when
establishing a relationship and then individuals who do. For both settings, we
formally relate the emerged hierarchical structures with the novel inclusion of
well-motivated hierarchy promoting terms in the individuals' utility functions.
We first analyze the game via a static analysis and characterize all the
hierarchical structures that can be formed as its solutions. We then consider
the game played dynamically under stochastic interactions among individuals
implementing better-response dynamics and analyze the nature of the converged
networks.
