  In this paper we address how complex social communities emerge from local
decisions by individuals with limited attention and knowledge. This problem is
critical; if we understand community formation mechanisms, it may be possible
to intervene to improve social welfare. We propose an interpretable, novel
model for attributed community formation driven by resource-bounded
individuals' strategic, selfish behavior. In our stylized model, attributed
individuals act strategically in two dimensions: attribute and network
structure. Agents are endowed with limited attention, and communication costs
limit the number of active connections. In each time step, each agent proposes
a new friendship. Agents then accept proposals, decline proposals, or remove
friends, consistent with their strategy to maximize payoff. We identify
criteria (number of stable triads) for convergence to some community structure
and prove that our community formation model converges to a stable network.
Ablations justify the ecological validity of our model and show that each
aspect of the model is essential. Our empirical results on a physical world
microfinance community demonstrate excellent model fits compared to baseline
models.
