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on Network Economics |
| By: | Charness, Gary; Feri, Francesco; Meléndez-Jiménez, Miguel A.; Sutter, Matthias |
| Abstract: | We study behavior and equilibrium selection in experimental network games. We varytwo important factors: (a) actions are either strategic substitutes or strategic complements, and(b) subjects have either complete or incomplete information about the structure of a randomnetwork. Play conforms strongly to the theoretical predictions, providing an impressivebehavioral confirmation of the Galeotti, Goyal, Jackson, Vega-Redondo, and Yariv (2010)model. The degree of equilibrium play is striking, even with incomplete information. We findthat under complete information, subjects typically play the stochastically-stable (inefficient)equilibrium when the game involves strategic substitutes, but play the efficient one with strategiccomplements. Our results suggest that equilibrium multiplicity may not be a major concern.Subjects’ actions and realized outcomes under incomplete information depend strongly on boththe degree and the connectivity. When there are multiple equilibria, subjects begin by playing theefficient equilibrium, but eventually converge to the inefficient one. |
| Keywords: | Economics, General, Economics, Other, random networks, incomplete information, strategic substitutes, strategic complements, experiment |
| Date: | 2012–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsbec:qt51v6w9hd&r=net |
| By: | Jeon, Doh-Shin; Jullien, Bruno; Klimenko, Mikhail |
| Abstract: | The World Wide Web was originally a totally English-based medium due to its US origin. Although the presence of other languages has steadily risen, content in English is still dominant, which raises a natural question of how bilingualism of con- sumers of a home country a¤ects production of web content in the home language and domestic welfare? In this paper, we address this question by studying how bilingual- ism a¤ects competition between a foreign search engine and a domestic one within a small country and thereby production of home language content. We ?nd that bilingualism unambiguously softens platform competition, which in turn can induce a reduction in home language content and in home country?s welfare. In particular, it is possible that content in the foreign language crowds out so much content in the home language that consumers enjoy less content when they are bilingual than when they are monolingual. |
| Keywords: | anguage, Bilingualism, Platform, Search Engine, Two-sided Mar- ket, International Trade. |
| Date: | 2012–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:26162&r=net |
| By: | Bradley J. Ruffle (BGU); Oscar Volij (BGU) |
| Abstract: | Kingston (1976) and Anderson (1977) show that the probability that a given contestant wins a best-of-2k+1 series of asymmetric, zero-sum, binary-outcome games is, for a large class of assignment rules, independent of which contestant is assigned the advantageous role in each component game. We design a laboratory experiment to test this hypothesis for four simple role-assignment rules. Despite the fact that play does not uniformly conform to the equilibrium, our results show that the four assignment rules are observationally equivalent at the series level: the fraction of series won by a given contestant and all other series outcomes do not differ across the four rules. |
| Keywords: | experimental economics, two-sided competitions, best-of series |
| JEL: | C90 D02 L83 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:1208&r=net |
| By: | Hubert Janos Kiss (Eötvös Loránd University, Department of Economics); Ismael Rodriguez-Lara (ERI-CES); Alfonso Rosa-Garcia (Universidad de Murcia, Dpt. Analisis Economico) |
| Abstract: | We report experimental evidence on the effect of observability of actions on bank runs. We model depositors' decision-making in a sequential framework, with three depositors located at the nodes of a network. Depositors observe the other depositors' actions only if connected by the network. A sufficient condition to prevent bank runs is that the second depositor to act is able to observe the first one's action (no matter what is observed). Experimentally, we find that observability of actions affects the likelihood of bank runs, but depositors' choice is highly influenced by the particular action that is being observed. This finding suggests a new source for the ocurrence of bank runs. Observability of actions can provoke runs that cannot be explained neither by coordination nor by fundamental problems, the two main culprits identified by the literature. |
| Keywords: | bank runs, social networks, coordination failures, experimental evidence |
| JEL: | C70 C91 D80 D85 G21 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0812&r=net |
| By: | Iván Arribas (ERI-CES); Penélope Hernández (ERI-CES); Jose E. Vila (ERI-CES) |
| Abstract: | This paper analyzes the role played by two dimensions of entrepreneurs’ private social capital in the survival, growth and innovativeness of entrepreneurial service ventures: local size and preferential attachment degree. We build a bi-dimensional measure of social capital based on network models and a methodology to estimate this measure for any group of entrepreneurs. Based on a survey of service entrepreneurs who launched their business in the city of Shanghai, we show that roles played by each dimension are quite different. A large local size of the network increases the chances of survival of the new venture. However, the chance to become a dynamic venture is only related to entrepreneurs’ preferential attachment degree. This finding has relevant political and managerial implications. |
| Keywords: | social capital, networks, innovation, entrepreneurship |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0612&r=net |
| By: | Alessandra Fogli; Laura Veldkamp |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ste:nystbu:12-16&r=net |
| By: | Olaizola Ortega, María Norma; Valenciano Llovera, Federico |
| Abstract: | This paper provides a new model of network formation that bridges the gap between the two benchmark models by Bala and Goyal, the one-way flow model, and the two-way flow model, and includes both as particular extreme cases. As in both benchmark models, in what we call an "asymmetric flow" network a link can be initiated unilaterally by any player with any other, and the flow through a link towards the player who supports it is perfect. Unlike those models, in the opposite direction there is friction or decay. When this decay is complete there is no flow and this corresponds to the one-way flow model. The limit case when the decay in the opposite direction (and asymmetry) disappears, corresponds to the two-way flow model. We characterize stable and strictly stable architectures for the whole range of parameters of this "intermediate" and more general model. We also prove the convergence of Bala and Goyal's dynamic model in this context. |
| Keywords: | non-cooperative network formation, asymmetric flow, stability, efficiency, dynamics |
| JEL: | D20 A14 C72 |
| Date: | 2012–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:8633&r=net |
| By: | Zhang Li; Ilya Pollak |
| Abstract: | The events of the last few years revealed an acute need for tools to systematically model and analyze large financial networks. Many applications of such tools include the forecasting of systemic failures and analyzing probable effects of economic policy decisions. We consider optimizing the amount and structure of a bailout in a borrower-lender network: Given a fixed amount of cash to be injected into the system, how should it be distributed among the nodes in order to achieve the smallest overall amount of unpaid liabilities or the smallest number of nodes in default? We develop an exact algorithm for the problem of minimizing the amount of unpaid liabilities, by showing that it is equivalent to a linear program. For the problem of minimizing the number of defaults, we develop an approximate algorithm using a reweighted l1 minimization approach. We illustrate this algorithm using an example with synthetic data for which the optimal solution can be calculated exactly, and show through numerical simulation that the solutions calculated by our algorithm are close to optimal. |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1209.3982&r=net |
| By: | Bruce A. Blonigen; Lionel Fontagné; Nicholas Sly; Farid Toubal |
| Abstract: | This paper develops a dynamic model of cross-border M&A activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels several years prior to acquisition, but then suffered a negative productivity shock (i.e., cherries for sale). With high ex ante productivity levels, target firms are able to invest in large export networks that are valuable to foreign multinationals because of locational differences and trade costs. Subsequently, domestic firms that experience reductions in productivity no longer find their established network as valuable to serve independently, increasing the surplus generated by a foreign acquisition. From the theory we derive a dynamic panel binary choice empirical model that uses predetermined export activity and the evolution of target firm productivity over time to predict cross-border M&A activity. Administrative data from French firms across 1999-2006 provide strong evidence that both the established export networks and productivity losses among target firms promote takeover by foreign multinationals. |
| JEL: | F12 F23 G34 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18414&r=net |
| By: | Sangyub Ryu (International University of Japan) |
| Abstract: | Scholars have emphasized networks as a new agenda or a necessary tool for solving public problems and research on networks have been actively conducted. However, little attention has been given to how collaboration partners are selected and activated. This question is critical when a networking partner is voluntarily chosen. To fill this gap in knowledge, this study proposes four possible scenarios for the selection of networking partners based on the intention to collaborate with a certain partner and the activation of collaboration with that partner. Results show that the scenario of not-intended-but-nonetheless-activated collaboration brings the highest increase in perceived success while the scenario of intended-and-activated collaboration results in the second highest among the four scenarios. However, it was also found that the scenario of not-intended-but-nonetheless-activated collaboration is less likely in the real world where public managers are asked to strategically find beneficial partner candidates and to achieve the activation of collaboration with those candidates. This study expects to promote understanding of the process of networking partner selection. |
| Keywords: | networking partner selection, collaboration success |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2012_17&r=net |
| By: | Tamás Sebestyén (Department of Economics and Regional Studies, University of Pécs); Attila Varga (Department of Economics and Regional Studies, University of Pécs) |
| Abstract: | This paper estimates the impact of interregional knowledge flows on the productivity of research at the regional level. We develop the novel index of ’ego network quality’ in order to measure the value of knowledge that can be accessed from a particular region’s global knowledge network. Quality of interregional knowledge networks is related to the size of knowledge accumulated by the partners (‘knowledge potential’), the extent of collaboration among partners (‘local density’) and the position of partners in the entire knowledge network (‘global embeddedness’). Ego network quality impact on the productivity of research in scientific publications and patenting at the regional level is tested with co-patenting and EU Framework Program collaboration data for 189 European NUTS 2 regions. |
| Keywords: | patents, scientific publications, knowledge networks, R&D productivity, regional knowledge production function, European regions |
| JEL: | O33 R11 R58 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:pec:wpaper:2012/2&r=net |