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on Network Economics |
| By: | Palaash Bhargava (Columbia University); Daniel L. Chen (Toulouse School of Economics); Matthias Sutter (Max-Planck Institute for Research on Collective Goods Bonn, University of Cologne and University of Innsbruck IZA Bonn, CESifoMunich); Camille Terrier (Queen Mary University London) |
| Abstract: | Social networks are segmented on gender, ethnicity, and other demographic characteristics. We present evidence on an understudied source of homophily: behavioral traits. Based on unique data from incentivized experiments with more than 2, 500 French high-school students, we find high levels of homophily across ten behavioral traits. Notably, homophily depends on similarities in demographic characteristics, in particular gender. Using network econometrics, we show that homophily is not only an outcome of endogenous network formation, but also driven by peer effects. The latter are larger when students share demographic characteristics, have longer periods of friendship, or are friends with more popular individuals. |
| Keywords: | Homophily, social networks, behavioral traits, peer effects, experiments |
| JEL: | D85 C91 D01 D90 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:227&r=net |
| By: | Lee, Kyu Yub (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Lee, Cheon-Kee (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Choi, Won Seok (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Eom, Jun-Hyun (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Whang, Unjung (Jeonbuk National University) |
| Abstract: | We use the Trade Agreements Provisions on Electronic Commerce and Data and their corresponding texts to undertake network and text analysis on trade agreements with digital trade chapters to identify which countries are important in the network and how similar or different their texts of digital trade chapters are. centrality values reflect which countries are influential in the network, while values of similarity assess the level of similarity between the texts of digital trade chapters concluded by these countries. Centrality and similarity are complementary in assessing the relative positions of countries in the network, where the number of linkages between countries is significant in centrality and the quality of digital trade chapters is critical in similarity. We interpret this to mean that a country with a high degree of centrality is likely to be a rule-promoter in the network, whereas a country with a high degree of similarity is likely to be a rule-maker. The brief highlights three key findings from network and text analysis of digital trade agreements: (1) The U.S. has been the best rule-maker but not the best rule-promoter, whereas Singapore has been the best rule-promoter but not the best rule-maker. (2) China is a rule-maker, but to a weaker extent than the U.S., and Korea is a rule-promoter, although it is less active than Singapore. (3) Japan and Australia have served as both rule-makers and rule-promoters. Identification of countries’ relative positions in the network of digital trade agreements would be useful at the start of talks on digital trade policy. |
| Keywords: | Digital Trade Agreement; Network Analysis; Text Analysis |
| Date: | 2023–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2023_003&r=net |
| By: | Raffaele Mattera; Philipp Otto |
| Abstract: | This paper presents a novel dynamic network autoregressive conditional heteroscedasticity (ARCH) model based on spatiotemporal ARCH models to forecast volatility in the US stock market. To improve the forecasting accuracy, the model integrates temporally lagged volatility information and information from adjacent nodes, which may instantaneously spill across the entire network. The model is also suitable for high-dimensional cases where multivariate ARCH models are typically no longer applicable. We adopt the theoretical foundations from spatiotemporal statistics and transfer the dynamic ARCH model for processes to networks. This new approach is compared with independent univariate log-ARCH models. We could quantify the improvements due to the instantaneous network ARCH effects, which are studied for the first time in this paper. The edges are determined based on various distance and correlation measures between the time series. The performances of the alternative networks' definitions are compared in terms of out-of-sample accuracy. Furthermore, we consider ensemble forecasts based on different network definitions. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.11064&r=net |
| By: | Bontemps, Christian; Gualdani, Cristina; Remmy, Kevin |
| Abstract: | We develop a two-stage game in which competing airlines first choose the networks of markets to serve in the first stage before competing in price in the second stage. Spillovers in entry decisions across markets are allowed, which accrue on the demand, marginal cost, and fixed cost sides. We show that the second-stage parameters are point identified, and we design a tractable procedure to set identify the first-stage parameters and to conduct inference. Further, we estimate the model using data from the domestic US airline market and find significant spillovers in entry. In a counterfactual exercise, we evaluate the 2013 merger between American Airlines and US Airways. Our results highlight that spillovers in entry and post-merger network readjustments play an important role in shaping post-merger outcomes. |
| Keywords: | Endogenous market structure; Networks; Airlines; Oligopoly; Product repositioning; Mergers; Remedies |
| Date: | 2023–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:127943&r=net |
| By: | Owen, Ann; Temesvary, Judit; Wei, Andrew |
| Abstract: | Leadership roles in banking remain dominated by men; only about one in six bank board members is female. Connections among board members can improve firm performance, but women on boards are much less connected than men. In this paper, we study how gender relates to the role of connections: how do connected female versus male board members affect banks’ performance? Using IV techniques to account for the endogeneity of connections, we find that (1) better connected female (but not male) board members improve bank profitability and reduce earnings management; (2) connections of women on important board committees also improve performance – especially when the share of women on the board is relatively high (above the median). |
| Keywords: | bank boards; professional networks; gender diversity; instrumental variables |
| JEL: | G21 G34 J16 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116811&r=net |