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on Network Economics |
| By: | Miguel Risco |
| Abstract: | In today’s world, social networks have a significant impact on information processes, shaping individuals’ beliefs and influencing their decisions. This paper proposes a model to understand how boundedly rational (DeGroot) individuals behave when seeking information to make decisions in situations where both social communication and private learning take place. The model assumes that information is a local public good, and individuals must decide how much effort to invest in costly information sources to improve their knowledge of the state of the world. Depending on the network structure and agents’ positions, some individuals will invest in private learning, while others will free-ride on the social supply of information. The model shows that multiple equilibria can arise, and uniqueness is controlled by the lowest eigenvalue of a matrix determined by the network. The lowest eigenvalue roughly captures how two-sided a network is. Two-sided networks feature multiple equilibria. Under a utilitarian perspective, agents would be more informed than they are in equilibrium. Social welfare would be improved if influential agents increased their information acquisition levels. |
| Keywords: | Information Acquisition, Learning, Public Goods, Network Effects, Information Diffusion, Bounded Rationality |
| JEL: | C72 D61 D83 D85 H41 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_420&r=net |
| By: | Ana Mauleon (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain = Catholic University of Louvain); Simon Schopohl (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain = Catholic University of Louvain); Akylai Taalaibekova (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Vincent Vannetelbosch (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain = Catholic University of Louvain) |
| Abstract: | We study a coordination game on a fixed connected network where players have to choose between two projects. Some players are moderate (i.e. they are ex-ante indifferent between both projects) while others are stubborn (i.e. they always choose the same project). Benefits for moderate players are increasing in the number of neighbors who choose the same project. In addition, players are either farsighted or myopic. Farsighted players anticipate the reactions of others while myopic players do not. We show that, when all players are farsighted, full coordination among the moderate players is reached except if there are stubborn players for both projects. When the population is mixed, the set of stable strategy profiles is a refinement of the set of Nash equilibrium strategy profiles. In fact, turning myopic players into farsighted ones eliminates gradually the inefficient Nash equilibria. Finally, we consider a social planner who can improve coordination by means of two policy instruments: adding links to the network (socialization) and/or turning myopic players into farsighted ones (education). |
| Keywords: | Networks, Coordination problems, Stubborn players, Farsighted players, Stability |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-04085258&r=net |
| By: | Alessandro Calvia; Fausto Gozzi; Marta Leocata; Georgios I. Papayiannis; Anastasios Xepapadeas; Athanasios N. Yannacopoulos |
| Abstract: | We introduce a spatial economic growth model where space is described as a network of interconnected geographic locations and we study a corresponding finite-dimensional optimal control problem on a graph with state constraints. Economic growth models on networks are motivated by the nature of spatial economic data, which naturally possess a graph-like structure: this fact makes these models well-suited for numerical implementation and calibration. The network setting is different from the one adopted in the related literature, where space is modeled as a subset of a Euclidean space, which gives rise to infinite dimensional optimal control problems. After introducing the model and the related control problem, we prove existence and uniqueness of an optimal control and a regularity result for the value function, which sets up the basis for a deeper study of the optimal strategies. Then, we focus on specific cases where it is possible to find, under suitable assumptions, an explicit solution of the control problem. Finally, we discuss the cases of networks of two and three geographic locations. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.11568&r=net |
| By: | Peter Rønø Thingholm (Department of Economics and Business Economics, Aarhus University) |
| Abstract: | While it is widely recognized that treatment choices of health care providers vary across similar patients, reasons for this remain poorly understood. This paper estimates the spatial evolution of opioid prescription leniency of health care providers. Using exits and entries of primary care providers into local markets I document spillover effect in opioid prescription leniency across primary care practices. My results imply that an increase in opioid leniency of 1 standard deviation of a random provider peer increases the leniency of the focal provider by 7% of a standard deviation. Finally, I apply the network model to estimate how increased opioid use is harmful to patients’ labor market outcomes. |
| Keywords: | Labor market, Opioids, Provider Practice Style |
| JEL: | I11 I12 |
| Date: | 2023–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2023-05&r=net |
| By: | Matteo Bizzarri (University of Naples Federico II and CSEF.); Fabrizio Panebianco (Università Cattolica di Milano.); Paolo Pin (Università di Siena and BIDSA.) |
| Abstract: | We analyze the effect of homophily in an epidemics between two groups of agents that differ in vaccination rates (“vaxxers" and “anti-vaxxers"). The steady state infection rate is hump-shaped in homophily, whereas the cumulative number of agents infected during an outbreak is u-shaped. If vaccination rates are endogenous, homophily has the opposite impact on the two groups, but the qualitative behavior of the aggregate is unchanged. However, the sign of the group-level impact is the opposite if vaccination is motivated by infection risk or by peer pressure. If motivations are group-specific, homophily can be harmful for both groups. |
| Keywords: | Homophily; seasonal diseases; vaccination; anti-vaccination movements; SIS-type model. |
| JEL: | D62 D85 I12 I18 |
| Date: | 2023–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:672&r=net |
| By: | Yassine Sbai Sassi |
| Abstract: | We propose a rate optimal estimator for the linear regression model on network data with interacted (unobservable) individual effects. The estimator achieves a faster rate of convergence $N$ compared to the standard estimators' $\sqrt{N}$ rate and is efficient in cases that we discuss. We observe that the individual effects alter the eigenvalue distribution of the data's matrix representation in significant and distinctive ways. We subsequently offer a correction for the \textit{ordinary least squares}' objective function to attenuate the statistical noise that arises due to the individual effects, and in some cases, completely eliminate it. The new estimator is asymptotically normal and we provide a valid estimator for its asymptotic covariance matrix. While this paper only considers models accounting for first-order interactions between individual effects, our estimation procedure is naturally extendable to higher-order interactions and more general specifications of the error terms. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.12554&r=net |