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on Network Economics |
| By: | Takuya Masuzawa (Faculty of Economics, Keio University) |
| Abstract: | In this article, we consider a many-to-one two-sided matching market and define a canonical strategic form game, in which any worker applies to the top k firms and is assigned to the most preferred firm that does not reject him/her. Under the substitute property of firms' preferences, the game satisfies the punishment-dominance condition. The deferred-acceptance algorithm by Gale and Shapley (Amer. Math. Monthly 69: 1962), which finds the maximum and minimum of stable matchings, is described as an instance of the algorithm by Masuzawa (Int. Jour. Game Theory 38: 2008), which determines the α-cores of the strategic form games with the punishment-dominance condition. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:kei:dpaper:2012-018&r=net |
| By: | Fang, Yiwei (Lally School of Management and Technology, Rensselaer Polytechnic Institute); Francis , Bill (Lally School of Management and Technology, Rensselaer Polytechnic Institute); Hasan, Iftekhar (Fordham University and Bank of Finland Research) |
| Abstract: | This paper examines through various channels the effects of CEO social network heterogeneity on firm value. We construct four measures of heterogeneity based on demographic attributes, intellectual backgrounds, professional experience, and geographical exposures of individuals in the CEO social network. We find that CEO social network heterogeneity leads to higher Tobin's Q of firms. Greater CEO social network heterogeneity also leads to: (i) more innovation, (ii) more foreign sales growth, (iii) higher investment sensitivity to Tobin’s Q, and (iv) better M&A performance. Overall, our results indicate that CEO social network heterogeneity is an aspect of CEO social capital and soft skills that deserves the attention of shareholders. |
| Keywords: | CEO; social networks; corporate finance policy decisions; firm value |
| JEL: | D71 G30 G32 Z10 |
| Date: | 2012–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2012_026&r=net |
| By: | Pradeep Dubey (Department of Economics, Stony Brook University); Rahul Garg (Opera Solutions, INDIA); Bernard De Meyer (Cermsem, Univesit´e Paris 1, Paris, FRANCE) |
| Abstract: | There are many situations in which a customer’s proclivity to buy the product of any firm depends not only on the classical attributes of the product such as its price and quality, but also on who else is buying the same product. Under quite general circumstances, it turns out that customers’ influence on each other dynamically converges to a steady state. Thus we can model these situations as games in which firms compete for customers located in a “social network”. A canonical example is provided by competition for advertisement on the web. Nash Equilibrium (NE) in pure strategies exist in general. In the quasi-linear version of the model, NE turn out to be unique and can be precisely characterized. If there are no a priori biases between customers and firms, then there is a cut-off level above which high cost firms are blockaded at an NE, while the rest compete uniformly throughout the network. Otherwise there is a tendency towards regionalization, with firms dominating disjoint territories. We also explore the relation between the connectivity of a customer and the money firms spend on him. This relation becomes particularly transparent when externalities are dominant: NE can be characterized in terms of the invariant measures on the recurrent classes of the Markov chain underlying the social network. Finally we consider convex (instead of linear) cost functions for the firms. Here NE need not be unique as we show via an example. But uniqueness is restored if there is enough competition between firms or if their valuations of clients are anonymous. |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:12-10&r=net |
| By: | Karaçuka, Mehmet; Çatik, A. Nazif; Haucap, Justus |
| Abstract: | Turkish consumer survey data is used to analyze the main factors that affect consumers' choice of different mobile telecommunications networks. The analysis shows that consumers' choice is significantly affected by the choices of other consumers with whom the consumer is more likely to interact. The results show that local network effects exist and consumer characteristics have significant effects on consumer choice. This finding means that consumers are more likely to be affected by the choices of other people within their local area than by the overall size of a network. The results also suggest that local effects may outweigh macro network effects at least in Turkey. -- |
| Keywords: | mobile telecommunications,network effects,discrete choice analysis |
| JEL: | C23 L13 L9 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:70&r=net |
| By: | Gabriel E. Kreindler; H. Peyton Young |
| Abstract: | The diffusion of an innovation can be represented by a stochastic process in which agents choose noisy best responses to what their neighbors are currently doing. Diffusion is said to be fast if the expected time until a majority of agents play the stochastically stable (risk-dominant) equilibrium scales with the size of the network. Previous work has identified specific topological properties of networks that result in fast diffusion. Here we derive topology-free bounds such that diffusion is fast in any network with a given degree distribution (and no restriction on the topology), so long as the payoff gain from the innovation is sufficiently high and the response function is moderately noisy. In particular for the logit response function it suffices that the error rate be on the order of 5% and the payoff gain on the order of 80% to achieve fast diffusion in any regular network. |
| Keywords: | Innovation diffusion, Convergence time, Local Interaction |
| JEL: | C72 C73 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:626&r=net |
| By: | Luljeta Hajderllari (Institute of Food and Resource Economics, University of Copenhagen) |
| Abstract: | The main aim of this paper is to investigate the “embeddedness” of business relationships with social relationships of Danish farmer investors (DFI) concerning agricultural investment and expansion abroad. A survey was sent to 61 DFIs with activities in Central and Eastern European countries who are members of an organisation named Danish Farmers Abroad. The survey elicited information regarding their organisational network connections to other DFIs who also have activities abroad. Information about the DFIs’ network was obtained regarding their business relationships (cooperation, competition and advice given and received to and from other DFIs) and social relationships (friendship). The data of the four different networks was analysed by the Double Dekker Semi-Partialling Multiple Regression Quadratic Assignment Procedure in UCINET. The results indicate that cooperation as well as received and given advice are positively related to social ties, whereas competition is negatively related to social ties. These results support the idea that business relationships (with the exception of competition) of DFIs are embedded in social relationships. This indicates that the same actors may behave less cooperatively in environments with low trust where they have to compete for scarce resources. |
| Keywords: | Embeddedness, social network analysis, Danish farmer investors |
| JEL: | M14 L22 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2012_13&r=net |
| By: | Mitchell, Green |
| Abstract: | This paper seeks to retest the oligopolistic cooperation hypothesis of market structure from the Centralized Private Sector Planning literature, using 2010 data on corporate board membership and recent advances in social network analysis. Centrality measures are calculated based upon the corporate governance network emerging from common board membership on Fortune 100 firms. The findings herein suggest that not only does oligopolistic cooperation continue to characterize the US economy, but directors from the finance and insurance sector occupy a significantly more central role in the planning process than those of other industries. |
| Keywords: | John Munkirs; Centralized Private Sector Planning; Social Network Analysis; Oligopolistic Cooperation |
| JEL: | L14 D21 B52 Z13 D43 |
| Date: | 2012–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42304&r=net |
| By: | Jens Leth Hougaard (Institute of Food and Resource Economics, University of Copenhagen); Hervé Moulin (Department of Economics, Rice University) |
| Abstract: | We ask how to share the cost of finitely many public goods (items) among users with different needs: some smaller subsets of items are enough to serve the needs of each user, yet the cost of all items must be covered, even if this entails inefficiently paying for redundant items. Typical examples are network connectivity problems when an existing (possibly inefficient) network must be maintained. We axiomatize a family of simple usage indices, one for each agent and for each item, measuring the relative worth of this item across agents, and generating cost sharing rules additive in costs. |
| Keywords: | Cost sharing; Redundant costs; Connection networks; Connectivity |
| JEL: | C71 D30 D85 M41 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:foi:msapwp:06_2012&r=net |
| By: | Habis , Helga (Department of Economics, Lund University); Csercsik, Dávid (Institute of Economics, Research Centre for Economic and Regional Studies, Hungarian Academy) |
| Abstract: | We introduce a new class of cooperative games where the worth of a coalition depends on the behavior of other players and on the state of nature as well. We allow for coalitions to form both before and after the resolution of uncertainty, hence agreements must be stable against both types of deviations. The appropriate extension of the classical core concept, the Sustainable Core, is defined for this new setup to test the stability of allocations in such a complex environment. A prominent application, a game of consumers and generators on an electrical energy transmission network is examined in details, where the power in- and outlets of the nodes have to be determined in a way, that if any line instantaneously fails, none of the remaining lines may be overloaded. We show that fulfilling this safety requirement in a mutually acceptable way can be achieved by choosing an element in the Sustainable Core. |
| Keywords: | partition function form games; uncertainty; core; sustainability |
| JEL: | C71 C73 D62 L14 L94 |
| Date: | 2012–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2012_027&r=net |