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on Network Economics |
| By: | Arieli, Itai; Babichenko, Yakov; Peretz, Ron; Young, H. Peyton |
| Abstract: | New ways of doing things often get started through the actions of a few innovators, then diffuse rapidly as more and more people come into contact with prior adopters in their social network. Much of the literature focuses on the speed of diffusion as a function of the network topology. In practice, the topology may not be known with any precision, and it is constantly in flux as links are formed and severed. Here, we establish an upper bound on the expected waiting time until a given proportion of the population has adopted that holds independently of the network structure. Kreindler and Young (2014) demonstrated such a bound for regular networks when agents choose between two options: the innovation and the status quo. Our bound holds for directed and undirected networks of arbitrary size and degree distribution, and for multiple competing innovations with different payoffs. |
| Keywords: | Innovation diffusion; social networks; speed of equilibrium convergence |
| JEL: | J1 |
| Date: | 2020–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102538&r=all |
| By: | Asgharian, Hossein (Knut Wicksell Centre for Financial Studies, Lund University); Krygier, Dominika (Knut Wicksell Centre for Financial Studies, Lund University); Vilhelmsson, Anders (Knut Wicksell Centre for Financial Studies, Lund University) |
| Abstract: | We suggest that banks contribute extensively to systemic risk only if they are both “risky” and centrally placed in the financial network. To calculate systemic risk we apply the ∆CoVaR measure of Adrian and Brunnermeier (2016) and measure centrality using detailed US loan syndication data. In agreement with our conjecture our main finding is that centrality is an important determinant of systemic risk but primarily not by its direct effect. Rather, its main influence is to make other firm specific risk measures more important for highly connected banks. A bank’s contribution to systemic risk from a fixed level of Value-at-Risk is about four times higher for a bank with two standard deviations above average centrality compared to a bank with average network centrality. Neglecting this indirect moderation effect of centrality severely underestimates the importance of centrality for “risky” banks and overestimates the effect for “safer” banks. |
| Keywords: | systemic risk; network centrality; loan syndication; ∆CoVaR; quantile regression |
| JEL: | G10 |
| Date: | 2019–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luwick:2019_001&r=all |
| By: | Berliant, Marcus |
| Abstract: | We examine the fine microstructure of commuting in a game-theoretic setting with a continuum of commuters. Commuters' home and work locations can be heterogeneous. A commuter transport network is exogenous. Traffic speed is determined by link capacity and by local congestion at a time and place along a link, where local congestion at a time and place is endogenous. The model can be reinterpreted to apply to congestion on the internet. We find sufficient conditions for existence of equilibrium, that multiple equilibria are ubiquitous, and that the welfare properties of morning and evening commute equilibria differ on a generalization of a directed tree. |
| Keywords: | Commuting; Internet traffic; Congestion externality; Efficient Nash equilibrium |
| JEL: | L86 R41 |
| Date: | 2020–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99603&r=all |
| By: | Commander, Simon (IE Business School, Altura Partners); Poupakis, Stavros (University of Oxford) |
| Abstract: | Political networks are an important feature of the political and economic landscape of countries. Despite their ubiquity and significance, information on such networks has proven hard to collect due to a pervasive lack of transparency. However, with the advent of big data and artificial intelligence, major financial services institutions are now actively collating publicly available information on politically exposed persons and their networks. In this study, we use one such data set to show how network characteristics vary across political systems. We provide results from more than 150 countries and show how the format of the network tends to reflect the extent of democratisation of each country. We also outline further avenues for research using such data. |
| Keywords: | political networks, rent-seeking, democratic consolidation |
| JEL: | D72 H11 P26 P36 N44 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13103&r=all |
| By: | Francesco Agostinelli (University of Pennsylvania); Matthias Doepke (Northwestern University); Giuseppe Sorrenti (University of Amsterdam); Fabrizio Zilibotti (Yale University) |
| Abstract: | As children reach adolescence, peer interactions become increasingly central to their development, whereas the direct influence of parents wanes. Nevertheless, parents may continue to exert leverage by shaping their children’s peer groups. We study interactions of parenting style and peer effects in a model where children’s skill accumulation depends on both parental inputs and peers, and where parents can affect the peer group by restricting who their children can interact with. We estimate the model and show that it can capture empirical patterns regarding the interaction of peer characteristics, parental behavior, and skill accumulation among US high school students. We use the estimated model for policy simulations. We find that interventions (e.g., busing) that move children to a more favorable neighborhood have large effects but lose impact when they are scaled up because parents’ equilibrium responses push against successful integration with the new peer group. |
| Keywords: | busing, neighborhood effects, peer effects, skill development |
| JEL: | J13 J24 I24 J62 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2020-024&r=all |
| By: | Gutierrez, Italo A. (RAND); Molina, Oswaldo (Universidad del Pacifico) |
| Abstract: | This study builds on the findings of Carrell and Hoekstra (2010, 2018) by exploring the peer effects of domestic violence exposure over the academic attainment of secondary school students in Peru. However, we also study these peer effects over a novel set of outcomes: internalizing behaviors and forms of violence at school. Our results show that being in a classroom with peers exposed to domestic violence leads to increased dropout and school mobility rates; increased levels of depression, isolation, victimization from bullying and attitudes towards violence at school; and lower verbal and math test scores. We also find no evidence that internalizing behaviors and forms of violence at school constitute mediators through which peer exposure to domestic violence affects test scores. |
| Keywords: | domestic violence, peer effects, bullying, education, internalizing behaviors |
| JEL: | D62 I21 J12 J13 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13111&r=all |
| By: | Tamas Fleiner (Centre for Economic and Regional Studies, Institute of Economics); Ravi Jagadeesan (Harvard Business School, and Department of Economics, Harvard University); Zsuzsanna Janko (Department of Mathematics, University of Hamburg); Alexander Teytelboym (Department of Economics, Institutefor New Economics Thinking, and St.-Catherine's College, University of Oxford) |
| Abstract: | We show how frictions and continuous transfers jointly affect equilibria in a model of matching in trading networks. Our model incorporates distortionary frictions such as transaction taxes, bargaining costs, and incomplete markets. When contracts are fully substitutable for firms, competitive equilibria exist and coincide with outcomes that satisfy a cooperative stability property called trail stabity. In the presence of frictions, competitive equilibria might be neither stable nor (constrained) Pareto-efficient. In the absence of frictions, on the other hand, competitive equilibria are stable and in the core, even if utility is imperfectly transferable. |
| Keywords: | Trading networks; frictions; competitive equilibrium; matching withcontracts; trail stabity; transaction taxes; commission |
| JEL: | C62 C78 D47 D51 D52 L14 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:2008&r=all |
| By: | Mohamed Benabdelkrim (emlyon business school); Clément Levallois; Jean Savinien; Céline Robardet |
| Abstract: | Institutional scholarship studies how individuals coexist and interact with social structures. Organizations and inter-organizational relations within industries are a central focus of these studies. Hence, empirical research has so far largely relied on the observation of individual actors identified by their organizational attributes, and organizations identified by their industry characteristics. The flourishing of new types of social structures has sent an invitation to observe a broader range of actors beyond organizations stricto sensu, and to define the arena of interest beyond the boundaries of industry membership. However, in practice, these remain a favorite starting point of empirical investigations. In this article, we present a new method for the study of organizational fields that facilitates the identification of a large number and varied types of actors in a given field, provides a characterization of the relational structure of the field, and offers a content analysis on different sub-regions of the field. We test the method by replicating a previous study in the field of ‘social impact of nonprofits', and show how it can contribute to operationalize mechanisms at play in the field. We conclude by noting that the principles of this method can extend beyond the dataset it is originally built on and facilitate a comparative approach to the study of fields. This contribution should enhance the value of the field as a theoretical construct by extending its operational reach. |
| Keywords: | Online Social Networks,Classification,Fields,methodology,Curation |
| Date: | 2020–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02529429&r=all |
| By: | Michael Bailey; Abhinav Gupta; Sebastian Hillenbrand; Theresa Kuchler; Robert J. Richmond; Johannes Stroebel |
| Abstract: | We use anonymized data from Facebook to construct a new measure of the pairwise social connectedness between 180 countries and 332 European regions. We find that two countries trade more with each other when they are more socially connected and when they share social connections with a similar set of other countries. The social connections that determine trade in each product are those between the regions where the product is produced in the exporting country and those where it is used in the importing country. Once we control for social connectedness, the estimated effect of geographic distance on trade declines substantially, and the effect of country borders disappears. Our findings suggest that social connectedness increases trade by reducing information asymmetries and by providing a substitute for both trust and formal mechanisms of contract enforcement. We also present evidence against omitted variables and reverse causality as alternative explanations for the observed relationships between social connectedness and trade flows. |
| JEL: | F1 F6 G0 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26960&r=all |