nep-net New Economics Papers
on Network Economics
Issue of 2010‒05‒15
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Coordination and Critical Mass in a Network Market: An Experimental Investigation By Bradley J. Ruffle; Avi Weiss; Amir Etziony
  2. An experimental analysis of team production in networks By Enrique Fatas; Miguel A. Melendez Jimenez; Hector Solaz
  3. Network Topology and Equilibrium Existence in Weighted Network Congestion Games By Igal Milchtaich
  4. Competing Activities in Social Networks By Mohamed Belhaj; Frédéric Deroïan
  5. Explaining technology adoption with information cascades: A study of microblogging data By Thomas Chesney; Derek Foster; Shaun Lawson

  1. By: Bradley J. Ruffle (Department of Economics, Ben-Gurion University of the Negev); Avi Weiss (Department of Economics Bar-Ilan University); Amir Etziony (Hewlett-Packard)
    Abstract: A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. We introduce an experimental paradigm to study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass.
    Keywords: experimental economics, network goods, coordination game, critical mass
    JEL: C92 L19
    Date: 2010
  2. By: Enrique Fatas (ERI-CES); Miguel A. Melendez Jimenez (University of Malaga); Hector Solaz (ERI-CES)
    Abstract: Experimental and empirical evidence highlights the role of networks on social outcomes. In this paper we test the properties of exogenously fixed networks in team production. Subjects make the same decisions in a team-work environment under four different organizational networks: The line, the circle, the star, and the complete network. In all the networks, links make information available to neighbors. This design allows us to analyze decisions across networks and a variety of subjects’ types in a standard linear team production game. Contribution levels differ significantly across networks and the star is the most efficient incomplete one. Moreover, our results suggest that subjects act as conditional cooperators with respect to the information received from the network.
    Keywords: public goods, networks, experiments
    JEL: H41 C92
    Date: 2010–05
  3. By: Igal Milchtaich (Department of Economics, Bar-Ilan University)
    Abstract: Every finite noncooperative game can be presented as a weighted network congestion game, and also as a network congestion game with player-specific costs. In the first presentation, different players may contribute differently to congestion, and in the second, they are differently (negatively) affected by it. This paper shows that the topology of the underlying (undirected two-terminal) network provides information about the existence of pure-strategy Nash equilibrium in the game. For some networks, but not for others, every corresponding game has at least one such equilibrium. For the weighted presentation, a complete characterization of the networks with this property is given. The necessary and sufficient condition is that the network has at most three routes that do traverse any edge in opposite directions, or it consists of several such networks connected in series. The corresponding problem for player-specific costs remains open.
    Keywords: Congestion games, network topology, existence of equilibrium
    JEL: C72
    Date: 2010–05
  4. By: Mohamed Belhaj (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Frédéric Deroïan (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)
    Abstract: A set of agents is organized in a social network, which conveys synergies in two activities. Each agent has one unit of a resource to allocate between two activities. We show that individual choices are shaped by Bonacich centrality measures and an attractiveness multiplier. The latter, combined with the elasticity of Bonacich centrality with respect to the intensity of interaction, drives the sign of the network reaction to a modication of the costs of activities.
    Keywords: Social Network, Limited Resource, Competing Activities, Attractiveness Multiplier, Elasticity of Bonacich Centrality.
    Date: 2010–05–06
  5. By: Thomas Chesney (Nottingham University Business School); Derek Foster (Lincoln School of Computer Science, University of Lincoln); Shaun Lawson (Lincoln School of Computer Science, University of Lincoln)
    Abstract: Initial adoption of technology is examined. Initial adoption refers to the point at which the decision to adopt a technology is made, before the user has formed perceptions of - for instance - how easy it is to use or how useful it is. Adoption behaviour is explained in terms of information cascades. An information cascade exists when a potential technology adopter ignores their private information about the technology and is influenced by the adoption decisions of others. Data were drawn from a microblogging service. Microblogging is a form of social networking where short messages are sent from one blogger to many readers. The system is voluntary and unlike many information systems, gives potential adopters the ability to clearly see the adoption decisions of others. Two empirical analyses support the notion that an individual's decision to adopt is influenced by the decisions of others. A third study examines a possible alternative explanation – that some individuals are lurking, thereby adopting the system although not in the way intended by the developers – and discounts it. We found strong support for the importance of the adoption decision of others in an individual's decision to adopt. A general model of these ideas is one which recognises the importance of what might be termed buzz around a technology and how this can influence adoption decisions.
    Keywords: Information cascade, Microblogging, Technology adoption.
    Date: 2010–05–06

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