Author: Malte CherdronPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
Essays on Heterogeneity in Economic Networks
Author: Malte CherdronEssays on the Formation of Social and Economic Networks
Author: Liza CharroinPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
In a world where networks become a dominant form of organization, the structure of networks and the position of individuals in these networks affect individual behavior and aggregate economic outcomes. The analysis of network formation by a central planner or by individuals themselves is at the heart of this thesis on the economics of networks.Chapter 1 theoretically studies the optimal formation and protection of networks by a central planner knowing that an external agent can destroy k links. The protection of the network can be guaranteed either by densifying the links between nodes, or by protecting the links. When the cost of protection is relatively small, a minimally connected network composed of protected links guarantees the communication flow; if this cost is high, the optimal solution is to form a symmetric network where each node has at least k+1 non-protected links.Chapter 2 explores the decentralized formation of networks in the laboratory by analyzing individual linking formation decisions when one agent has a higher value than others and that the linking formation process is sequential. The results show that sequentiality facilitatesthe coordination on efficient networks but that do not correspond to the Subgame PerfectEquilibrium. The heterogeneity across agents increases the asymmetry of networks because of the polarization of links on the agent with a higher value.Chapter 3 studies the impact of the endogenous formation of networks on the importance of peer effects, applied to dishonest behavior. In order to identify the effects of social comparisons, two controlled environments are designed in the laboratory in which individuals choose or not their peers, and then observe their behavior. The results show that peer effects on dishonest behavior are significantly higher when individuals can choose their peers.
Interaction and Market Structure
Author: Domenico Delli GattiPublisher: Springer Science & Business Media
ISBN: 3642570054
Category : Business & Economics
Languages : en
Pages : 302
Book Description
This book is a collection of essays which examine how the properties of aggregate variables are influenced by the actions and interactions of heterogenous individuals in different economic contexts. The common denominator of the essays is a critique of the representative agent hypothesis. If this hypothesis were correct, the behaviour of the aggregate variable would simply be the reproduction of individual optimising behaviour. In the methodology of the hard sciences, one of the achievements of the quantum revolution has been the rebuttal of the notion that aggregate behaviour can be explained on the basis of the behaviour of a single unit: the elementary particle does not even exist as a single entity but as a network, a system of interacting units. In this book, new tracks in economics which parallel the developments in physics mentioned above are explored. The essays, in fact are contributions to the analysis of the economy as a complex evolving system of interacting agents.
Essays on the Economics of Social Networks
Author: Won Hee ParkPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
This dissertation consists of two projects, both concerned with how social networks form and how they affect economic decisions. In the first project, entitled Identifying Influential Agents in a Social Network, I define influence centrality, a new measure of influence which combines information on node and neighbor characteristics as well as information on the network structure, by building a model of friendship formation and peer effects and calculating the change in the equilibrium behavior of the network when one node changes its behavior. I apply the model to the context of smoking among middle and high school students and show that a targeted anti-smoking intervention in which a small number of influential smoking students are treated may be more efficient than a uniform program where every student in the school receives the same anti-smoking treatment. The second project, entitled Quantifying Spillovers in Network Formation Over Time, is a joint work with Sean Chu and Shankar Kalyanaraman at Facebook. The goal of the project is to separately identify and understand the relative importance of network effects and unobserved heterogeneity in a multi-period network formation model. Here, we define network effects to be the effect of the number of mutual friends on the probability of friendship and assume that unobserved heterogeneity is time-consistent. We estimate the model on a de-identified panel data set from a small group of users on Facebook and find that both network effects and unobserved heterogeneity are statistically and economically significant predictors of friendship formation on Facebook. We further re-estimate the model first, without network effects and next, without unobserved heterogeneity. Comparing the results from these specifications, we find that network effects play a more important role than unobserved heterogeneity in network formation models on Facebook.
Four Essays on Economic Networks
Author: Lucas VernetPublisher:
ISBN:
Category :
Languages : en
Pages : 117
Book Description
This dissertation lies at the intersection of two fields of research in economics that have recently substantially developed: on the one hand, the modeling and study of economic networks, and on the other hand, transport theory and its applications in economics. The four chapters of this dissertation present theoretical results in relation with these two topics and put stress on their connections. The first chapter models bipartite contracts on a decentralized market as an equilibrium flow problem. We prove the existence of a competitive equilibrium outcome and discuss its effciency. We interpret this equilibrium in the case of indivisible commodities. As an illustration, we build a model for the overnight interbank loan market with counterparty risk and collateralization costs. In the second one, written in collaboration with Alfred Galichon and Larry Samuelson, we prove a monotone comparative statics theorem that we then apply to several classical economic models (matching models, min-cost flow problems and hedonic models). The third chapter is a joint work with Alfred Galichon and Arthur Charpentier. It presents tools to solve for matching problems on large geographic networks before applying them to examples. Finally, the fourth chapter, written with Rakesh Vohra, shows how a monopolistic insurer can use externalities between agents - modeled as a network - to maximize his profit. We show that a monopolistic insurer decreases the welfare of all agents.
Essays on Economic Networks
Author: Benjamin GolubPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
This dissertation theoretically analyzes how networks of relationships among decision-makers affect two kinds of economic processes: (i) investment in public goods; and (ii) repeated updating of beliefs or behaviors based on observing neighbors. The results connect these processes to the spectral properties of networks -- that is, eigenvalues and eigenvectors -- and use the connection to shed light on economic outcomes. The first essay, based on joint work with Matthew Elliott, focuses on games in which each player simultaneously exerts costly effort that provides different benefits to each other player. The goal is to find and describe effort profiles that are immune to coordinated coalitional deviations when such a game is played repeatedly. Formally, these effort profiles are the ones that can be sustained in a strong Nash equilibrium of the repeated game. We introduce a class of effort profiles that are called centrality-stable. These are characterized by a network centrality condition: agent A's contribution (defined as effort level times marginal cost) is equal to a weighted sum of the contributions of those who help A; the weight on B's contribution measures the marginal benefit B's effort provides to A. Under certain assumptions (mainly concavity of utility functions), centrality-stable profiles exist, are Pareto-efficient, and any such profile is sustainable in a coalitionally robust equilibrium of the repeated game. Centrality-stable profiles also have an alternative definition: they are those at which all agents are first-order indifferent to scaling all efforts by a factor near $1$. This single condition rules out all profitable coalitional deviations. The results are obtained without parametric assumptions, using the theory of general equilibrium and its relation to the core, along with the Perron-Frobenius spectral theory of nonnegative matrices. When agents are uncertain about each other's utility functions but can verify marginal costs and benefits at an implemented effort profile, then the centrality-stable profiles are the only ones that are immune to manipulation through misreporting of preferences. The second essay, based on joint work with Matthew O. Jackson, studies learning in a setting where agents receive independent noisy signals about the true value of a variable and then communicate in a network. They naively update beliefs by repeatedly taking weighted averages of neighbors' opinions. We show that all opinions in a large society converge to the truth if and only if the influence of the most influential agent on the long-run beliefs vanishes as the society grows. We also identify obstructions to this, including the existence of prominent groups, and provide structural conditions on the network ensuring efficient learning. The third essay, also based on joint work with Matthew O. Jackson, examines how the speed of such an updating process depends on homophily: the tendency of agents to associate disproportionately with those having similar traits. When agents' beliefs or behaviors are developed by averaging what they see among their neighbors -- as in the learning model discussed above or in a myopic best-reply dynamic -- convergence to a consensus is slowed by the presence of homophily, but is not influenced by network density. This is in stark contrast to the viral spread of a belief or behavior along shortest paths -- a process whose speed is increasing in network density but does not depend on homophily. In deriving these results, we propose a new, general spectral measure of homophily based on the relative frequencies of interactions among different groups.
Essays in the Economics of Heterogeneity
Author: Laurent E. CalvetEssays on Decision Theory and Economic Networks
Author: Pedram HeydariPublisher:
ISBN:
Category :
Languages : en
Pages : 151
Book Description
This dissertation contains three chapters, the first two of which are on decision theory and the last of which is on social and economic networks. In the first chapter, I model a decision maker who is able to evaluate the available options in multiple subjective dimensions or attributes, but is not generally able to aggregate the values of these attributes through a single utility function to rank the available options. This inability arises whenever there are multiple attributes that lead to conflicting ranking over the options. The model that I propose is able to account for a number of violations of standard utility maximization models such as stochastic choice and context dependence, in particular the attraction effect and the compromise effect. I provide an axiomatic characterization of my model. An important feature of this model is that attributes are identified through the observed choices. The second chapter extends the random utility framework to the realm of choices over menus of alternatives. More specifically, I assume that as modelers we can only observe the aggregate choices of a heterogenous population of decision makers over menus (e.g. restaurants). Furthermore, I assume that each member of the population behaves according to the standard model of choice over menus. Specifically, each decision maker has a well-defined strict preference ordering over individual alternatives (e.g. meals) and chooses an available restaurant that offers the best meal among all the available restaurants. The potential heterogeneity of the population makes the aggregate choices over menus appear stochastic. In the main result of the paper, I provide a characterization of all stochastic choice data over menus that are consistent with a population of standard decision makers. The third chapter is on social and economic networks and studies the integration of two communities that face a barrier to communicate with one another. We assume that nodes benefit from both direct and indirect connections, but direct connections come also with a cost. We capture the barrier of communication between the two communities by assuming that inter-community links are more costly than intra-community links. In this context, we characterize all integrated structures that are efficient. Next, we determine which of these efficient structures can be also stable. A notable feature of our work is a new class of multi core and periphery structures that we introduce in this paper as parallel hyperstars.
Essays on Economics and Networks
Author: Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
In the first essay, motivated by the seminal work of Robert Fogel on U.S. railroads, I reformulate Fogel's original counterfactual history question on 19th century U.S. economic growth without railroads by treating the transport network as an endogenous equilibrium object. I quantify the effect of the railroad on U.S. growth from its introduction in 1830 to 1861. Specifically, I estimate the output loss in a counterfactual world without the technology to build railroads, but retaining the ability to construct the next-best alternative of canals. My main contribution is to endogenize the counterfactual canal network through a decentralized network formation game played by profit-maximizing transport firms. I perform a similar exercise in a world without canals. I find that railroads and canals are strategic complements, not strategic substitutes. Therefore, the output loss can be quite acute when one or the other is missing from the economy. In the set of Nash stable networks, relative to the factual world, the median value of output is 45% lower in the canals only counterfactual and 49% lower in the railroads only counterfactual. Such a stark output loss is due to two main mechanisms: inefficiency of the decentralized equilibrium due to network externalities and complementarities due to spatial heterogeneity in costs across the two transport modes. In the second essay, the historical dynamics of entry and exit in the financial exchange industry are analyzed for a panel of 741 exchanges in 52 countries from 1855 through 2012. We focus on economic, technological, and regulatory factors. Using novel panel data evidence, we empirically test whether these factors are consistent with existing financial theories. We find that US exchanges are 4.6% more likely to exit per year after the passage of the Securities Exchange Act. The telephone, literacy, and regulation are robust predictors of financial exchange dynamics. The upward trend in literacy is an important driver of exchange entry.
Author: Nils-Holger Gudat