nep-net New Economics Papers
on Network Economics
Issue of 2009‒09‒26
nine papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. What Goes Around Comes Around: A Theory of Indirect Reciprocity in Networks By Mihm, Maximilian; Toth, Russell; Lang, Corey
  2. Analysis of a network structure of the foreign currency exchange market By Jaroslaw Kwapien; Sylwia Gworek; Stanislaw Drozdz; Andrzej Gorski
  3. Class formation in a social network with asset exchange By Christian H. Sanabria; R. Huerta-Quintanilla; M. Rodriguez-Achach
  4. Networks, Hierarchies, and Markets: Aggregating Collective Problem Solving in Social Systems By Lazer, David; Mergel, Ines; Ziniel, Curt; Esterling, Kevin; Neblo, Michael
  5. The Multi-Network of International Trade: A Commodity-Specific Analysis By Matteo Barigozzi; Giorgio Fagiolo; Diego Garlaschelli
  6. Student Network Centrality and Academic Performance: Evidence from United Nations University By Zhang, Ying; Rajabzadeh, Iman; Lauterbach, Rodolfo
  7. Caste as Community? Networks of social affinity in a South Indian village By Arora, Saurabh; Sanditov, Bulat
  8. Structure and temporal change of the credit network between banks and large firms in Japan By Yoshi Fujiwara; Hideaki Aoyama; Yuichi Ikeda; Hiroshi Iyetomi; Wataru Souma
  9. An Analysis of the Japanese Credit Network By G. De Masi; Y. Fujiwara; M. Gallegati; B. Greenwald; J. E. Stiglitz

  1. By: Mihm, Maximilian (Cornell University); Toth, Russell (Cornell University); Lang, Corey (Cornell University)
    Abstract: We consider strategic interaction on a network of heterogeneous long-term relationships. The bilateral relationships are independent of each other in terms of actions and realized payoffs, and we assume that information regarding outcomes is private to the two parties involved. In spite of this, the network can induce strategic interdependencies between relationships, which facilitate efficient outcomes. We derive necessary and sufficient conditions that characterize efficient equilibria of the network game in terms of the architecture of the underlying network, and interpret these structural conditions in light of empirical regularities observed in many social and economic networks.
    JEL: C73 D82 D85
    Date: 2009–08
  2. By: Jaroslaw Kwapien; Sylwia Gworek; Stanislaw Drozdz; Andrzej Gorski
    Abstract: We analyze structure of the world foreign currency exchange (FX) market viewed as a network of interacting currencies. We analyze daily time series of FX data for a set of 63 currencies, including gold, silver and platinum. We group together all the exchange rates with a common base currency and study each group separately. By applying the methods of filtered correlation matrix we identify clusters of closely related currencies. The clusters are formed typically according to the economical and geographical factors. We also study topology of weighted minimal spanning trees for different network representations (i.e., for different base currencies) and find that in a majority of representations the network has a hierarchical scale-free structure. In addition, we analyze the temporal evolution of the network and detect that its structure is not stable over time. A medium-term trend can be identified which affects the USD node by decreasing its centrality. Our analysis shows also an increasing role of euro in the world's currency market.
    Date: 2009–06
  3. By: Christian H. Sanabria; R. Huerta-Quintanilla; M. Rodriguez-Achach
    Abstract: In this paper the study of two kinds of economic exchange, additive and multiplicative, in a system of N agents has been made. The work is divided in two parts, in the first one, the agents are free to interact with each other. The system evolves to a Boltzmann-Gibbs distribution with additive exchange a condenses with a multiplicative one. If bankruptcy is introduced, both types of exchange lead to condensation. Condensation times have been studied. In the second part, the agents are placed in a social network. We analyze the behavior of wealth distributions in time, and the formation of economic classes was observed for certain values of network connectivity.
    Date: 2009–05
  4. By: Lazer, David (Harvard University); Mergel, Ines (Syracuse University); Ziniel, Curt (University of California, Riverside); Esterling, Kevin (University of California, Riverside); Neblo, Michael (Ohio State University)
    Abstract: How do decentralized systems collectively solve problems? Here we explore the interplay among three canonical forms of collective organization--markets, networks, and hierarchies--in aggregating decentralized problem solving. We examine these constructs in the context of how the offices of members of Congress individually and collectively wrestle with the Internet, and, in particular, their use of official websites. Each office is simultaneously making decisions about how to utilize their website. These decisions are only partially independent, where offices are looking at each other for lessons, following the same directives from above about what to do with the websites, and confront the same array of potential vendors to produce their website. Here we present the initial results from interviews with 99 Congressional offices and related survey of 100 offices about their decisions regarding how to use official Member websites. Strikingly, we find that there are relatively few efforts by offices to evaluate what constituents want or like on their websites. Further, we find that diffusion occurs at the "tip of the iceberg": offices often look at each others' websites (which are publicly visible), but rarely talk to each other about their experiences or how they manage what is on their websites (which are not publicly visible). We also find that there are important market drivers of what is on websites, with the emergence of a small industry of companies seeking to serve the 440 Members. Hierarchical influences--through the House and through the party conferences--also constrain and subsidize certain practices.
    Date: 2009–06
  5. By: Matteo Barigozzi; Giorgio Fagiolo; Diego Garlaschelli
    Abstract: We study the topological properties of the multi-network of commodity-specific trade relations among world countries over the 1992-2003 period, comparing them with those of the aggregate-trade network, known in the literature as the international trade network (ITN). We show that link-weight distributions of commodity-specific networks are extremely heterogeneous and (quasi) log-normality of aggregate link-weight distribution is generated as a sheer outcome of aggregation. Commodity-specific networks also display average connectivity, clustering and centrality levels very different from their aggregate counterpart. We also find that ITN complete connectivity is mainly achieved through the presence of many weak links that keep commodity-specific networks together, and that the correlation structure existing between topological statistics within each single network is fairly robust and mimics that of the aggregate network. Finally, we employ cross-commodity correlations between link weights to build taxonomies of commodities. Our results suggest that on the top of a relatively time-invariant "intrinsic" taxonomy (based on inherent between-commodity similarities), the roles played by different commodities in the ITN have become more and more dissimilar, possibly as the result of an increased trade specialization.
    Date: 2009–08
  6. By: Zhang, Ying (UNU-MERIT); Rajabzadeh, Iman (UNU-MERIT); Lauterbach, Rodolfo (UNU-MERIT)
    Abstract: In this paper we empirically studied the relationship between network centrality and academic performance among a group of 47 PhD students from UNU-MERIT institute. We conducted an independent email survey and relied on social networks theory as well as standard econometric procedures to analyse the data. We found a significant reversed U-shaped relation between network centrality and students' academic performance. We controlled our results by several node's characteristics such as age, academic background, and research area. Additional evidence shows that there is a negative impact of age on academic performance at PhD student level. Contributions of this paper can refer to the input into studies that aim to explore peereffect. Also it contributes to the methodological approach by combining elements of network analysis and econometric theories. This study demonstrates that when evaluating the impact of network centrality on performance, there is no significant difference between various network centrality measurements.
    Keywords: Networks analysis, Network centrality, Peer-effect, Academic performance
    JEL: D85 I21 I23 L14
    Date: 2009
  7. By: Arora, Saurabh (School of Innovation Sciences, Eindhoven University of Technology); Sanditov, Bulat (UNU-MERIT, Maastricht University)
    Abstract: We examine three theories of caste and community using new data on social networks among residents of a south Indian village. The first theory treats individual caste groups as separated communities driven by the Brahmanical ideology of hierarchy based on purity and pollution. The second theory departs from the first by placing kings and landlords at the centre of rural (primeval) social structure. Here ritual giving by kings provides the glue that holds a community together by transferring inauspiciousness to gift-recipients and ensuring community welfare. The third theory, that may be treated as a corollary of the second, argues that powerful leaders in the religious and political domains act as patrons of people in their constituencies and forge a sense of community. The resulting community may be single or multi-caste. Using a community structure algorithm from social network analysis, we divide the network of the village into thirteen tight-knit clusters. We find that no cluster or community in the social network has exactly the same boundaries as a caste group in the village. Barring three exceptions, all clusters are multi-caste. Our results are most consistent with the third theory: each cluster has a patron/leader who represents the interests of his constituency at village-level fora and bridges caste and community divides.
    Keywords: Social networks, culture, caste, social change, community development, rural India
    JEL: Z13 O10
    Date: 2009
  8. By: Yoshi Fujiwara; Hideaki Aoyama; Yuichi Ikeda; Hiroshi Iyetomi; Wataru Souma
    Abstract: We present a new approach to understanding credit relationships between commercial banks and quoted firms, and with this approach, examine the temporal change in the structure of the Japanese credit network from 1980 to 2005. At each year, the credit network is regarded as a weighted bipartite graph where edges correspond to the relationships and weights refer to the amounts of loans. Reduction in the supply of credit affects firms as debtor, and failure of a firm influences banks as creditor. To quantify the dependency and influence between banks and firms, we propose a set of scores of banks and firms, which can be calculated by solving an eigenvalue problem determined by the weight of the credit network. We found that a few largest eigenvalues and corresponding eigenvectors are significant by using a null hypothesis of random bipartite graphs, and that the scores can quantitatively describe the stability or fragility of the credit network during the 25 years.
    Date: 2009–01
  9. By: G. De Masi; Y. Fujiwara; M. Gallegati; B. Greenwald; J. E. Stiglitz
    Abstract: An analysis of the Japanese credit market in 2004 between banks and quoted firms is done in this paper using the tools of the networks theory. It can be pointed out that: (i) a backbone of the credit channel emerges, where some links play a crucial role; (ii) big banks privilege long-term contracts; the "minimal spanning trees" (iii) disclose a highly hierarchical backbone, where the central positions are occupied by the largest banks, and emphasize (iv) a strong geographical characterization, while (v) the clusters of firms do not have specific common properties. Moreover, (vi) while larger firms have multiple lending in large, (vii) the demand for credit (long vs. short term debt and multi-credit lines) of firms with similar sizes is very heterogeneous.
    Date: 2009–01

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