  How does an individual's cognition change a system which is a collective
behavior of individuals? Or, how does a system affect an individual's
cognition? To examine the interplay between a system and individuals, we study
a cognition-based network formation. When a network is not fully observable,
individuals' perception of a network plays an important role in decision
making. Assuming that a communication link is costly, and more accurate
perception yields higher network utility, an agent decides whether to form a
link in order to get better information or not. Changes in a network with newly
added links affect individuals' perception accuracy, which may cause further
changes in a network. We characterize the early stage of network dynamics and
information dispersion. Network structures in a steady state are also examined.
Additionally, we discuss local interactions and a link concentration in a
frequently changing network.
