Book excerpt: When Murat Sertel asked us whether we would be interested in organizing a special issue of the Review of Economic Design on the formation of networks and groups, we were happy to accept because of the growing research on this important topic. We were also pleasantly surprised at the response to our request for submissions to the special issue, receiving a much larger number of sub missions than we had anticipated. In the end we were able to put together two special issues of insightful papers on this topic. Given the growing interest in this topic, we also decided (with encouragement from Murat) to combine the special issues in the form of a book for wider dissemination. However, once we had decided to edit the book, it was natural to move beyond the special issue to include at least some of the papers that have been influential in the literature on the formation of networks. These papers were published in other journals, and we are very grateful to the authors as well as the journals for permission to include these papers in the book.