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on Network Economics |
| By: | Chirantan Ganguly; Indrajit Ray |
| Abstract: | We consider a Battle of the Sexes game with two types, High and Low, for each player and allow cheap talk regarding players' types before the game. We prove that the unique fully revealing symmetric cheap talk equilibrium exists for a low range of prior probability of the High-Type. This equilibrium has a desirable type-coordination property: it fully coordinates on the ex-post efficient pure Nash equilbrium when the players' types are different. Type-coordination is also obtained in a partially revealing equilibrium in which only the High-type is not truthful, for a medium range of prior probability of the High-type. |
| Keywords: | Battle of the Sexes, Private Information, Cheap Talk, Coordination, Full Revelation |
| JEL: | C72 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:13-01r&r=net |
| By: | Timo Hiller; Timo Hiller |
| Abstract: | This paper presents a simple model of strategic network formation with local complementarities in effort levels and positive local externalities for a general class of payoff functions. Results are obtained for one-sided and two-sided link creation. In both cases (pairwise) Nash equilibrium networks are nested split graphs, which are a strict subset of core-periphery networks. The relevance of the convexity of the value function (gross payoffs as a function of neighbours' effort levels when best responding) in obtaining nested split graphs is highlighted. Under additional assumptions on payoffs, we show that the only efficient networks are the complete and the empty network. Furthermore, there exists a range of linking cost such that any (pairwise) Nash equilibrium is inefficient and for a strict subset of this range any (pairwise) Nash equilibrium network structure is different from the efficient network. These findings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation, and R&D expenditures of rms. |
| Keywords: | Strategic network formation, peer effects, strategic complements, positive externalities. |
| JEL: | D62 D85 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stitep:/2013/564&r=net |
| By: | Fariba Karimi; Matthias Raddant |
| Abstract: | We analyze cascades of defaults in an interbank loan market. The novel feature of this study is that the network structure and the size distribution of banks are derived from empirical data. We find that the ability of a defaulted institution to start a cascade depends on an interplay of shock size and connectivity. Further results indicate that the ability to limit default risk by spreading the lending to many counterparts decreased with the financial crisis. To evaluate the influence of the network structure on market stability, we compare the simulated cascades from the empirical network with results from different randomized network models. The results show that the empirical network has non-random features, which cannot be captured by rewired networks. The analysis also reveals that simulations assuming homogeneity for size of banks and loan contracts dramatically overestimates the fragility of the interbank market. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1310.1634&r=net |
| By: | Matteo Barigozzi; Christian Brownlees |
| Abstract: | This work proposes novel network analysis techniques for multivariate time series. We dene the network of a multivariate time series as a graph where vertices denote the components of the process and edges denote non{zero long run partial correlations. We then introduce a two step lasso procedure, called nets, to estimate high{dimensional sparse Long Run Partial Correlation networks. This approach is based on a var approximation of the process and allows to decompose the long run linkages into the contribution of the dynamic and contemporaneous dependence relations of the system. The large sample properties of the estimator are analysed and we establish conditions for consistent selection and estimation of the non{zero long run partial correlations. The methodology is illustrated with an application to a panel of U.S. bluechips. |
| Keywords: | Networks, Multivariate Time Series, Long Run Covariance, Lasso |
| JEL: | C01 C32 C52 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:723&r=net |
| By: | Toivanen, Mervi (Financial Markets and Statistics, Bank of Finland) |
| Abstract: | This paper analyses the importance of individual bank-specific factors on financial stability. First, we use a novel method to model the spreading of the contagion in the interbank network by implementing an epidemiologic model. Actual data on European banks is exploited with simulated scale-free networks. The average contagion affected 70% and 40% of European banks’ total assets in 2007 and in 2010, respectively. Country-level results suggest that French, British, German and Spanish banks are the most contagious ones, whereas banks from Ireland, Greece and Portugal induce only limited negative effects. Secondly, cross-sectional panel estimations are performed to disentangle the leading indicators influencing the level of contagion. Bank clustering, large incoming interbank loans and bank reputation are more prominent explanatory variables than the size or leverage. Finally, central banks’ interventions reduce contagion only slightly. |
| Keywords: | contagion; banks; Europe; interbank; epidemiology; panel regression |
| JEL: | C15 G01 G21 |
| Date: | 2013–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2013_019&r=net |
| By: | Prostolupow, Irene; Pyka, Andreas; Heller-Schuh, Barbara |
| Abstract: | Research networks are regarded as channels for knowledge creation and diffusion and are thus essential for the development and integration of economies. In this paper we have a look at the long Turkish-German-migration history which should offer opportunities for both countries to benefit from brain circulation, transnational entrepreneurs and research networks. The present paper examines the structure of research networks of the European Framework Programmes (FP) that are established by joint participation of organizations in research projects, in particular German research organizations with Turkish participants in FP5 to FP7 in the knowledge-intensive technology fields ICT, Biotechnology and Nanoscience. A better understanding of these networks allows for improving the design of research policies at national levels as well as at the EU level. The empirical examination of network properties reveals that the diverse networks show a range of similarities in the three technology fields in each FP such as the small-world properties. Moreover, our findings show that German actors play a specific role in most examined research networks with Turkish participation. -- |
| Keywords: | Turkish-German-migration history,brain circulation,innovation networks,research networks,EU Framework Programmes,small-world characteristics,centrality measures |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:792013&r=net |
| By: | Thierry Pénard (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Nicolas Poussing (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development); Raphaël Suire (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie) |
| Abstract: | Given the increasingly prominent role the Internet plays in people's daily life, understanding its influence on individual well-being is crucial. Internet use yields direct utility and economic returns that may increase life satisfaction. But the Internet might also have detrimental effects (e.g. addiction, social isolation). This paper aims to examine the impact of Internet use on individual well-being. Using Luxemburgish data extracted from the European Value Survey, we find evidence that non users are less satisfied in their life than Internet users. Moreover, the positive influence of Internet use is stronger for individuals who are young or not satisfied with their income. These findings suggest that public policies aiming to reduce the digital divide by reaching out to non-Internet users are socially desirable. |
| Keywords: | Internet; Happiness; Life satisfaction; Digital divide; Social capital |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00864314&r=net |