nep-net New Economics Papers
on Network Economics
Issue of 2010‒07‒24
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Information, stability and dynamics in networks under institutional constraints. By Norma Olaizola; Federico Valenciano
  2. Risk Pooling, Risk preferences, and Social Networks By Orazio Attansio; Abigail Barr; Juan Camilo Cardenas; Garance Genicot; Costas Mehgir
  3. Who Will Be Idol? The Importance of Social Networks for Winning on Reality Shows By Heizler (Cohen), Odelia; Kimhi, Ayal
  4. Juvenile Delinquency and Conformism By Eleonora Patacchini; Yves Zenou
  5. Does the Rotten Child Spoil His Companion? Spatial Peer Effects Among Children in Rural India By Christian Helmers; Manasa Patnam
  6. Are gifts and loans between households voluntary? By Margherita Comola; Marcel Fafchamps
  7. Some Students are Bigger than Others, Some Students’ Peers are Bigger than Other Students’ Peers By Joan Gil; Toni Mora
  8. Solidarity in games with a coalition structure By Emilio Calvo; Maria Esther Gutierrez

  1. By: Norma Olaizola (UPV/EHU); Federico Valenciano (UPV/EHU)
    Abstract: In this paper we study the effects of institutional constraints on stability, efficiency and network formation. More precisely, an exogenous "societal cover" consisting of a collection of possibly overlapping subsets that covers the whole set of players and such tha no set in this collection is contained in another specifies the social organization in different groups or "societies". It is assumed that a player may initiate links only with players that belong to at leats one society that s/he also belongs to, thus restricting the feasible strategies and networks. In this way only the players in the possiby empty "societal core", i.e., those that belong to all societies, may initiate links with all individuals. In this setting the part of the current network within each connected component of the cover is assumed to be common knowledge to all players in that component. Based on this two-ingredient model, network and societal cover, we examine the impact of societal constraints on stable/efficient architectures and on dynamics.
    Keywords: Network, Non-cooperative game, Dynamics
    JEL: C72
    Date: 2010–07–14
  2. By: Orazio Attansio; Abigail Barr; Juan Camilo Cardenas; Garance Genicot; Costas Mehgir
    Abstract: Using date from a field experiment conducted in seventy Colombian municipalities, we investigate who pools risk with whom when risk pooling arrangements are not formally enforced. We explore the roles played by risk attitudes and network connections both theoretically and empirically. We find that pairs of participants who share a bond of friendship or kinship are more likely to (1) join the same risk pooling group and to (2) group assortatively with respect to risk attitudes. Also, consistent with our theoretical finding that when there is a problem of trust the process of pooling assortativley with respect to risk preferences is perturbed, we find (3) only weak evidence of such assorting among unfamiliar individuals.
    Keywords: Field experiment; risk sharing; social sanctions; Insurance; Group formation: matching.
    JEL: C93 D71 D81 O12
    Date: 2009
  3. By: Heizler (Cohen), Odelia (Hebrew University, Jerusalem); Kimhi, Ayal (Hebrew University, Jerusalem)
    Abstract: This paper examines, both theoretically and empirically, the effect of social networks and belonging to minority groups (or race) on the probability of winning in reality television shows. We develop a theoretical model that studies viewer behavior by presenting a framework of competition between two contestants from two different groups. The results are examined empirically using unique contestant data from the highly popular reality show "A Star Is Born", the Israeli counterpart of "American Idol". Our main finding is that social networks and belonging to minority groups play key roles in the contestant’s victory, but their effects are nonlinear: the social network effect is U-shaped, whereas that of belonging to a minority group follows an inverted U shape. Beyond the world of reality TV, this paper sheds light on the general behavior of social networks as well.
    Keywords: American Idol, social networks, minority groups, contest, voting
    JEL: J15 D71 P16
    Date: 2010–07
  4. By: Eleonora Patacchini (Università di Roma “La Sapienza” and IZA); Yves Zenou (Stockholm University and Research Institute of Industrial Economics (IFN), IZA, GAINS and CEPR)
    Abstract: This paper studies whether conformism behavior affects individual outcomes in crime. We present a social network model of peer effects with ex-ante heterogeneous agents and show how conformism and deterrence affect criminal activities. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. A novel social network-based empirical strategy allows us to identify peer effects for different types of crimes. We find that conformity plays an important role for all crimes, especially for petty crimes. This suggests that, for juvenile crime, an effective policy should not only be measured by the possible crime reduction it implies but also by the group interactions it engenders.
    Keywords: Social Networks, Linear-in-means Model, Spatial Autoregressive Model, Social Norms
    JEL: A14 C21 D85 K42 Z13
    Date: 2010–05
  5. By: Christian Helmers; Manasa Patnam
    Abstract: This paper identifies the effect of neighborhood peer groups on childhood skill acquisition using observational data. We incorporate spatial peer interaction, defined as a child’s nearest geographical neighbors, into a production function of child cognitive development in Andhra Pradesh, India. Our peer group construction takes the form of directed networks, whose structure allows us to identify peer effects and enables us to disentangle endogenous effects from contextual effects. We exploit variation over time to avoid confounding correlated with social effects. Our results suggest that spatial peer and neighborhood effects are strongly positively associated with a child’s cognitive skill formation. These peer effects hold even when we consider an alternative IV-based identification strategy and different variations to network size. Further, we find that the presence of peer groups helps provide insurance against the negative impact of idiosyncratic shocks to child learning.
    Keywords: Children, peer effects, cognitive skills, India
    JEL: C21 O15 R23
    Date: 2010
  6. By: Margherita Comola; Marcel Fafchamps
    Abstract: Using village date from Tanzania, we test whether gifts and loans between households are voluntary while correcting for mis-reporting by the giving and receiving households. Tow maintained assumptions underlie our analysis: answers to a question on who people would turn to for help are good proxies for willingness to link: and, conditional on regressors, the probability of reporting a gift or loan is independent between giving and receiving households. Building on these assumptions, we develop a new estimation methodology and gift giving are voluntary, then both households should, want to rely on each other for help. We find only weak evidence to support bilateral formation. We do, however, find reasonably strong evidence to support unilateral link formation. Results suggest that if a household wishes to enter in a reciprocal relationship with someone who is sufficiently close socially and geographically, it can do so unilaterally.
    Keywords: Risk sharing, reporting bias, social networks
    JEL: C13 C51 D85
    Date: 2010
  7. By: Joan Gil; Toni Mora
    Abstract: This paper analyses the extent to which peer influence on adolescent weight differs in a typical southern European country and in the United States, two geographical areas characterised by different economic, socio-cultural and environmental patterns. Our study is based on a survey of secondary school students containing a rich set of personal data and a wide range of school characteristics and parental backgrounds. After accounting for a large set of control factors and controlling for a combination of school- and neighbourhood-specific fixed effects, instrumental variable estimation and alternative definitions of peers, our results support a more powerful positive and significant effect of friends’ mean BMI on adolescent weight than that reported in previous US-based research.
    Date: 2010–06
  8. By: Emilio Calvo (ERI-CES); Maria Esther Gutierrez (Universidad del País Vasco/E.H.U)
    Abstract: A new axiomatic characterization of the two-step Shapley value (Kamijo, 2009) is presented based on a solidarity principle of the members of any union: when the game changes due to the addition or deletion of players outside the union, all members of the union will share the same gains/losses.
    Keywords: Games with a coalition structure. Owen value. The two-step Shapley value. Solidarity.
    JEL: C71
    Date: 2010–07

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