nep-net New Economics Papers
on Network Economics
Issue of 2013‒11‒22
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Structure and causality relations in a global network of financial companies By Sandoval, Leonidas Junior
  2. Altruism in Networks By Renaud Bourlès; Yann Bramoullé
  3. Financial network systemic risk contributions By Hautsch, Nikolaus; Schaumburg, Julia; Schienle, Melanie
  4. Equilibrium Selection under Limited Control - An Experimental Study of the Network Hawk-Dove Game By Siegfried Berninghaus; Stephan Schosser; Bodo Vogt
  5. The generalized network problem By Andre DE PALMA; Fay DUNKERLEY; Stefan PROOST
  6. Network structural properties for cluster long run dynamics. Evidence from collaborative R&D networks in the European mobile phone industry By Joan Crespo; Raphaël Suire; Jérôme Vicente
  7. Social Network Analysis and the Sociology of Economics: Filling a Blind Spot with the Idea of Social Embeddedness By Bögenhold, Dieter
  8. Financial interaction networks inferred from traded volumes By Hongli Zeng; R\'emi Lemoy; Mikko Alava

  1. By: Sandoval, Leonidas Junior
    Date: 2013–10
  2. By: Renaud Bourlès (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales [EHESS] - Ecole Centrale Marseille (ECM)); Yann Bramoullé (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales [EHESS] - Ecole Centrale Marseille (ECM))
    Abstract: We provide the first theoretical analysis of altruism in networks. Agents are embedded in a fixed, weighted network and care about their direct friends. Given some initial distribution of incomes, they may decide to support their poorer friends. We study the resulting non-cooperative transfer game. Our analysis highlights the importance of indirect gifts, where an agent gives to a friend because his friend himself has a friend in need. We uncover four main features of this interdependence. First, we show that there is a unique profile of incomes after transfers, for any network and any utility functions. Uniqueness in transfers holds on trees, but not on arbitrary networks. Second, there is no waste in transfers in equilibrium. In particular, transfers flow through indirect paths of highest altruistic strength. Third, a negative shock on one agent cannot benefit others and tends to affect socially closer agents first. In addition, an income redistribution that decreases inequality ex-ante can increase inequality ex-post. Fourth, altruistic networks decrease income inequality. In contrast, more altruistic or more homophilous networks can increase inequality.
    Keywords: private transfers; social networks; altruism; income redistribution; income inequality
    Date: 2013–11
  3. By: Hautsch, Nikolaus; Schaumburg, Julia; Schienle, Melanie
    Abstract: We propose the realized systemic risk beta as a measure for financial companies' contribution to systemic risk given network interdependence between firms' tail risk exposures. Conditional on statistically pre-identified network spillover effects and market as well as balance sheet information, we define the realized systemic risk beta as the total time-varying marginal effect of a firm's Value-at-risk (VaR) on the system's VaR. Statistical inference reveals a multitude of relevant risk spillover channels and determines companies' systemic importance in the U.S. financial system. Our approach can be used to monitor companies' systemic importance allowing for a transparent macroprudential supervision. --
    Keywords: time-varying systemic risk contribution,systemic risk network,network topology estimation,Value at Risk
    JEL: G01 G18 G32 G38 C21 C51 C63
    Date: 2013
  4. By: Siegfried Berninghaus (Karlsruhe Institute of Technology, Institute of Economics); Stephan Schosser (University of Magdeburg, Department of Economics); Bodo Vogt (University of Magdeburg, Department of Economics)
    Abstract: For games of simultaneous action selection and network formation, game-theoretic behavior and experimental observations are not in line: While theory typically predicts inefficient outcomes for (anti-)coordination games, experiments show that subjects tend to play efficient (non Nash) strategy profiles. A reason for this discrepancy is the tendency to model corresponding games as one-shot and derive predictions. In this paper, we calculate the equilibria for a finitely repeated version of the Hawk-Dove game with endogenous network formation and show that the repetition leads to additional equilibria, namely the efficient ones played by human subjects. We confirm our results by an experimental study. In addition, we show both theoretically and experimentally that the equilibria reached crucially depend on the order in which subjects adjust their strategy. Subjects only reach efficient outcomes if they first adapt their action and then their network. If they choose their network first, they do not reach efficient outcomes.
    Keywords: Network games, Hawk/Dove games, finitely repeated game
    JEL: D85 C72 C73 C92
    Date: 2013–11–13
  5. By: Andre DE PALMA; Fay DUNKERLEY; Stefan PROOST
    Abstract: Many transport and other service problems come down to simple network choices: what mode and/ or route to take, if some of the routes and modes are congested and their use can be priced or not priced by different operators. The operators can have different objective functions: public or private monopoly, private duopoly, etc.. This standard problem has been studied in many variants, mostly using the assumption of perfect substitutability between alternatives, so that in the deterministic Wardrop equilibrium, all routes that are used have the same generalized cost. This paper examines in more detail the role of the perfect substitutability assumption. Users of a network consume transport services, which are differentiated in two ways. There are objective differences in quality (length of route, congestion level) perceived by all users and there are individual idiosyncratic preferences for transport services. The resulting stochastic equilibrium is analysed on a simple parallel network for four types of ownership regimes: private ownership, coordinated public ownership, mixed public-private and public Stackelberg leadership. We find that, firstly, when total demand is fixed and there is congestion, then by controlling one route a government can achieve the First Best allocation, although the second route is privately operated or unpriced. This result holds whatever the level of substitutability and whatever the levels of congestion. Secondly, whenever imperfect substitutability is present, private supply of one of the two routes becomes relatively less efficient because the private supplier has an additional source of market power to exploit. If the better of the two routes is privately supplied it is always insufficiently used. However, if only one route can be privately operated, then this should always be the intrinsically better route.
    Date: 2013–11
  6. By: Joan Crespo; Raphaël Suire; Jérôme Vicente
    Abstract: In a recent literature, the structural properties of knowledge networks have been pointed out as a critical factor for cluster structural changes and long run dynamics. Mixing evolutionary economic geography and network-based approach of clusters, this contribution aims at capturing and discussing the particular influence of hierarchy (degree distribution) and assortativity (degree correlation) in the innovative capabilities of clusters along the industry life cycle. We test our propositions in the field of the mobile phone industry in Europe from 1988 to 2008. We use EPO PATSTAT and OECD REGPAT to capture cluster trends, and R&D relations from European Framework Programs to capture knowledge networks and their evolving structural properties. Our findings provide new insights to understand the organization of clusters over time in order to perform along the industry life cycle.
    Keywords: smart specialization, constructing regional advantage, Regional Cohesion Policy
    JEL: D85 L63 O33 R11
    Date: 2013–11
  7. By: Bögenhold, Dieter
    Abstract: Today, social networks analysis has become a cross-disciplinary subject with applications in diverse fields of social and economic life. Different network designs provide different opportunities to communicate, to receive information and to create different structures of cultural capital. Network analysis explores modes and contents of exchanges between different agents when symbols, emotions or goods and services are exchanged. The message of the article is that social network analysis provides a tool to foster the understanding of social dynamics, which enhances recent debate on a micro-macro gap and on limitations of the cognitive and explanatory potential of economics.
    Keywords: Social Network Analysis, social dynamics, micro-macro gap
    JEL: A1 A12 A14
    Date: 2013–01
  8. By: Hongli Zeng; R\'emi Lemoy; Mikko Alava
    Abstract: In order to use the advanced inference techniques available for Ising models, we transform complex data (real vectors) into binary strings, by local averaging and thresholding. This transformation introduces parameters, which must be varied to characterize the behaviour of the system. The approach is illustrated on financial data, using three inference methods -- equilibrium, synchronous and asynchronous inference -- to construct functional connections between stocks. We show that the traded volume information is enough to obtain well known results about financial markets, which use however the presumably richer price information: collective behaviour ("market mode") and strong interactions within industry sectors. Synchronous and asynchronous Ising inference methods give results which are coherent with equilibrium ones, and more detailed since the obtained interaction networks are directed.
    Date: 2013–11

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