nep-net New Economics Papers
on Network Economics
Issue of 2007‒01‒28
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Diffusion of Behavior and Equilibrium Properties in Network Games By Jackson, Matthew O.; Yariv, Leeat
  2. Endogenous Network Formation in the Laboratory By Celen, Bogachan; Hyndman, Kyle
  3. The Compromise Game: Two-sided Adverse Selection in the Laboratory By Juan D. Carrillo; Thomas R. Palfrey
  4. A Network Analysis of the Italian Overnight Money Market By Giulia Iori; Giulia de Masi; Ovidiu Precup; Giampaolo Gabbi; Guido Caldarelli
  5. Existence of Nash Networks in One-Way Flow Models (Revised Version of LSU Working Paper 2006-05) By Sudipta Sarangi; Pascal Billand; Christophe Bravard
  6. Research networks and scientific production in Economics, The recent Spanish Experience. By Raul Ramos; Vicente Royuela; Juan Carlos Duque
  7. A fitness model for the Italian Interbank Money Market By Giulia de Masi; Giulia Iori; Guido Caldarelli
  8. Pricing Patents for Licensing in Standard Setting Organisations: Making Sense of FRAND Commitments By Layne-Farrar, Anna; Padilla, Atilano Jorge; Schmalensee, Richard

  1. By: Jackson, Matthew O.; Yariv, Leeat
    Date: 2006–10
  2. By: Celen, Bogachan (Columbia GSB); Hyndman, Kyle (SMU)
    Abstract: This paper provides an experimental test of a theory of endogenous network forma- tion. A group of subjects face a decision problem under uncertainty. The subjects are endowed with a private information about the fundamentals of the problem, and they are supposed to make a decision one after the other. The key feature of the experiment is that a subject can observe the decisions of the preceding subjects by forming links. A link is costly, yet it enables a subject to observe previous decisions of those to whom he is linked. We show that subjects respond to changes in the information structure and the cost of link formation in the expected manner. However, we also show that behavior systematically deviates from the Bayesian benchmark as subjects form more links than theory predicts. Subjects also exhibit a tendency to conform rather than follow their own information. In order to explain this pattern, we provide an econo- metric model that posits that subjects care about their relative standing in the group. We show that the modified model provides a better fit than a standard QRE.
    Keywords: Social learning, social interaction, networks, network formation.
    JEL: A14 C73 C91 C92 D8
    Date: 2007–01
  3. By: Juan D. Carrillo; Thomas R. Palfrey
    Date: 2007–01–12
  4. By: Giulia Iori (Department of Economics, City University, London); Giulia de Masi (University of l’Aquila); Ovidiu Precup (King’s College London); Giampaolo Gabbi (SDA Bocconi School of Management); Guido Caldarelli (University of “La Sapienza”)
    Abstract: The objective of this paper is to analyze, by employing methods of statistical mechanics of complex networks, the network topology of the Italian segment of the European overnight money market. We investigate differences in the activities of banks of different size and the evolution of their connectivity structure over the maintenance period. The main objectives are to understand potential implications of current institutional arrangements on the stability of the banking system and to assess the efficiency of the interbank market in terms of absence of speculative and preferential trading relationships.
    Date: 2005–07–27
  5. By: Sudipta Sarangi; Pascal Billand; Christophe Bravard
    Abstract: This paper addresses the existence of Nash networks for the one-way flow model of Bala and Goyal (2000) in a number of different settings. First, we provide conditions for he existence of Nash networks in models where costs and values of links are heterogenous and players obtain resources from others only through the directed path between them. We find that costs of establishing links play a vital role in the existence of Nash networks. Next we examine the existence of Nash networks when there are congestion effects in the model. Then, we provide conditions for the existence of Nash networks in a model where a player’s payoff depends on the number of links she has established as well as on the number of links that other players in the population have created. More precisely, we show that convexity and increasing (decreasing) differences allow for the existence of Nash networks.
  6. By: Raul Ramos (Faculty of Economics, University of Barcelona.); Vicente Royuela (Faculty of Economics, University of Barcelona.); Juan Carlos Duque (Regional Analysis Laboratory (REGAL). San Diego State University.)
    Abstract: This paper studies Spanish scientific production in Economics from 1994 to 2004. It focuses on aspects that have received little attention in other bibliometric studies, such as the impact of research and the role of scientific collaborations in the publications produced by Spanish universities. Our results show that national research networks have played a fundamental role in the increase in Spanish scientific production in this discipline.
    Keywords: Bibliometric techniques, scientific production in Economics, research networks.
    Date: 2007–01
  7. By: Giulia de Masi; Giulia Iori (Department of Economics, City University, London); Guido Caldarelli
    Abstract: We use the theory of complex networks in order to quantitatively characterise the formation of communities in a particular financial market. The system is composed by different banks exchanging on a daily basis loans and debts of liquidity. Through topological analysis and by means of a model of network growth we can determine the formation of different group of banks characterized by different business strategy. The model based on Pareto's Law makes no use of growth or preferential attachment and it reproduces correctly all the various statistical properties of the system. We believe that this network modelling of the market could be an efficient way to evaluate the impact of different policies in the market of liquidity.
    Date: 2006–10
  8. By: Layne-Farrar, Anna; Padilla, Atilano Jorge; Schmalensee, Richard
    Abstract: We explore potential methods for assessing whether licensing terms for intellectual property declared essential within a standard setting organization can be considered fair, reasonable, and non-discriminatory (FRAND). We first consider extending Georgia-Pacific to a standard setting context. We then evaluate numeric proportionality, which is modelled after certain patent pool arrangements and which has been proposed in a pending FRAND antitrust suit. We then turn to two economic models with potential. The first—the efficient component-pricing rule (ECPR)—is based on the economic concept of market competition. The second—the Shapley value method—is based on cooperative game theory models and social concepts for a fair division of rents. Interestingly, these two distinct methods suggest a similar benchmark for evaluating FRAND licenses, but ones which might appeal differently to the courts and competition authorities in the US as compared to Europe. We find that under any approach, patents covering “essential” technologies with a greater contribution to the value of the standard and without close substitutes before the standard gets adopted should receive higher royalty payments after the adoption of the standard.
    Keywords: Efficiency; Fairness; Licensing; Patents; Standard Setting Organizations
    JEL: L24 L40
    Date: 2007–01

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