nep-net New Economics Papers
on Network Economics
Issue of 2015‒06‒05
nine papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Strategic influence in social networks By Michel Grabisch; Antoine Mandel; Agnieszka Rusinowska; Emily Tanimura
  2. Networking, context and firm-level innovation: Cooperation through the regional filter in Norway By Fitjar, Rune Dahl; Rodriguez-Pose, Andres
  3. Teams, Organization and Education Outcomes: Evidence from a field experiment in Bangladesh By Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
  4. Role of the interfirm buyer-seller network in aggregate fluctuation and the effect of link renewal By Ryohei Hisano; Tsutomu Watanabe; Takayuki Mizuno; Takaaki Ohnishi; Didier Sornette
  5. Systemic risk of Islamic Banks By Paolo Giudici; Shatha Hashem
  6. Systemic risk and macro-prudential policies: A credit network-based approach By Catullo, Ermanno; Gallegati, Mauro; Palestrini, Antonio
  7. Enhanced Gravity Model of trade: reconciling macroeconomic and network models By Assaf Almog; Rhys Bird; Diego Garlaschelli
  8. An Experimental Study of Persuasion Bias and Social Influence in Networks By Jordi Brandts; Ayça Ebru Giritligil; Roberto A. Weber
  9. Structure of global buyer-supplier networks and its implications for conflict minerals regulations By Takayuki Mizuno; Takaaki Ohnishi; Tsutomu Watanabe

  1. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Emily Tanimura (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: We consider a model of influence with a set of non-strategic agents and two strategic agents. The non-strategic agents have initial opinions and are linked through a simply connected network. They update their opinions as in the DeGroot model. The two strategic agents have fixed opinions, 1 and 0 respectively, and are characterized by the magnitude of the impact they can exert on non-strategic agents. Each strategic agent forms a link with one non-strategic agent in order to alter the average opinion that eventually emerges in the network. This procedure defines a zero-sum game whose players are the two strategic agents and whose strategy set is the set of non-strategic agents. We focus on the existence and the characterization of equilibria in pure strategy in this setting. Simple examples show that the existence of a pure strategy equilibrium does depend on the structure of the network. The characterization of equilibrium we obtain emphasizes on the one hand the influenceability of target agents and on the other hand their centrality whose natural measure in our context defines a new concept, related to betweenness centrality, that we call intermediacy. We also show that in the case where the two strategic agents have the same impact, symmetric equilibria emerge as natural solutions whereas in the case where the impacts are uneven, the strategic players generally have differentiated equilibrium targets, the high-impacts agent focusing on centrality and the low-impact agent on influenceability.
    Abstract: Nous considérons un modèle d'influence avec un ensemble d'agents non-stratégiques et deux agents stratégiques. Les agents non-stratégiques sont liés par un réseau simplement convexe et leurs opinions évoluent comme dans le modèle de DeGroot. Les deux agents stratégiques ont des opinions fixes, respectivement 1 et 0, et sont caractérisés par l'impact qu'ils exercent sur les croyances des agents non-stratégiques. Chaque agent stratégique forme exactement un lien avec un agent non-stratégique en vue d'influencer l'opinion moyenne limite qui se forme dans le réseau. Cette procédure définie un jeu à somme nulle où les ensembles de stratégie des deux joueurs sont l'ensemble des agents non-stratégiques. Nous nous intéressons à l'existence et à la caractérisation des équilibres de Nash en stratégie pure dans ce cadre. Des exemples simples montrent que l'existence d'équilibres en stratégie pure dépend de la structure du réseau. La caractérisation des équilibres que nous obtenons met en avant d'une part l'influençabilité et d'autre part l'influence des agents cibles que nous mesurons à travers un nouveau concept mesurant l'intermédiation effectuée par un agent.
    Date: 2015–01
  2. By: Fitjar, Rune Dahl; Rodriguez-Pose, Andres
    Abstract: The paper assesses the role for innovation of one aspect which has been generally overlooked by evolutionary economic geography: context. It analyses how context shapes the impact of collaboration on firm-level innovation for 1604 firms located in the five largest city regions of Norway. Specifically, the analysis shows how the benefits to firms of collaborating within regional, national, and international innovation networks are affected by the knowledge endowments of the region within which the firm is located. Using a logit regression analysis, we find, first, that only national and international networking have a significant positive impact on the likelihood of innovation (the former only for process innovation), whereas the regional knowledge endowments have no direct effect. Second, regional cooperation is particularly effective in regions with high investments in R&D, whereas international cooperation is important in regions with an educated workforce – and regional and national collaboration may be ineffective in such cases. We conclude that, in the case of Norway, context is essential in determining the capacity of firms to set up networks and innovate. Regions with an educated workforce can use the resulting absorptive capacity to successfully assimilate knowledge being diffused through global pipelines from faraway places. However, this absorptive capacity is likely to be heavily filtered if regional firms mainly rely on internal connections within Norway.
    Keywords: context; firms; human capital; innovation; interaction; networking; Norway; R&D
    JEL: O31 O32
    Date: 2015–05
  3. By: Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
    Abstract: We study the relationship between network centrality and educational outcomes using a field experiment in primary schools in Bangladesh. After obtaining information on friendship networks, we randomly allocate students into groups and give them individual and group assignments. We find that the groups that perform the best are those whose members have high Katz-Bonacich and key-player centralities. Leaders are mostly responsible for this effect, while bad apples have little influence. Group members' network centrality is also important in shaping individual performance. We show that network centrality captures non-cognitive skills, especially patience and competitiveness.
    Keywords: leaders; Network centrality; soft skills; team work
    JEL: A14 C93 D01 I20
    Date: 2015–05
  4. By: Ryohei Hisano; Tsutomu Watanabe; Takayuki Mizuno; Takaaki Ohnishi; Didier Sornette
    Abstract: The interfirm buyer-seller network is important from both macroeconomic and microeconomic perspectives. From a macroeconomic perspective, this network represents a form of interconnectedness that allows firm-level idiosyncratic shocks to be propagated to other firms. This propagation mechanism interferes with the averaging out process of shocks, having a possible impact on aggregate fluctuation. From a microeconomic perspective, the interfirm buyer-seller network is a result of a firm's strategic link renewal processes. There has been substantial research that models strategic link formation processes, but the economy-wide consequences of such strategic behaviors are not clear. We address these two questions using a unique dataset for the Japanese interfirm buyer-seller network. We take a structural equation modeling, and show that a large proportion of fluctuation in the average log growth rate of firms can be explained by the network and that link renewal by firms decreases the standard deviation of the log growth rate.
    Date: 2015–05
  5. By: Paolo Giudici (Department of Economics and Management, University of Pavia); Shatha Hashem (Omar Ibn Al-Khattab Street, Nablus, Palestine)
    Abstract: The main aim of this paper is to investigate the proposition that Islamic banking services support financial stability. We examine this proposition using network modelling for stock market returns based on graphical Gaussian distributions, aimed at capturing the contagion effects that move along countries, combined with a regression modelling approach, aimed at capturing the effect of bank- specific strategies, that depend on the degree of Islamic financial services spe- cialization levels. The integration between the two models will enable us to distinguish the systemic correlations between banks due to common idiosyn- cratic characteristics, from the systemic correlation that can be attributed to country effects that are common to all banks in a given country. Our proposed models are applied to the MENA region banking sector for the period from 2007 to 2014.
    Keywords: Camels regression, Centrality measures, Graphical Gaussian models, Islamic bank specialisation levels
    Date: 2015–05
  6. By: Catullo, Ermanno; Gallegati, Mauro; Palestrini, Antonio
    Abstract: Assessing systemic risk and defining macro-prudential policies aiming at reducing economic system vulnerability have been at the center of the economic debate of the last years. Credit networks play a crucial role in diffusing and amplifying local shocks, following the network-based financial accelerator approach (Delli Gatti et al., 2010; Battiston et al., 2012), we constructed an agent based model reproducing an artificial credit network populated by heterogeneous firms and banks. Calibrating the model on a sample of firms and banks quoted on Japanese stock-exchange mar- kets from 1980 to 2012, we try to define both early warning indicators of crises and policy precautionary measures based on the analysis of the endogenous dynamics of credit network connectivity.
    Date: 2015
  7. By: Assaf Almog; Rhys Bird; Diego Garlaschelli
    Abstract: The bilateral trade relations between world countries form a complex network, the International Trade Network (ITN), which is involved in an increasing number of worldwide economic processes, including globalization, integration, industrial production, and the propagation of shocks and instabilities. Characterizing the ITN via a simple yet accurate model is an open problem. The classical Gravity Model of trade successfully reproduces the volume of trade between two connected countries using known macroeconomic properties such as GDP and geographic distance. However, it generates a network with an unrealistically homogeneous topology, thus failing to reproduce the highly heterogeneous structure of the real ITN. On the other hand, network models successfully reproduce the complex topology of the ITN, but provide no information about trade volumes. Therefore macroeconomic and network models of trade suffer from complementary limitations but are still largely incompatible. Here, we make an important step forward in reconciling the two approaches, via the introduction of what we denote as the Enhanced Gravity Model (EGM) of trade. The EGM combines the maximum-entropy nature of network models with the established econometric structure of the Gravity Model. Using a single, unified and principled mechanism that is transparent enough to be generalized to other economic networks, the EGM allows trade probabilities and trade volumes to be separately controlled via any combination of dyadic and country-specific macroeconomic variables. We show that the EGM successfully reproduces both the topology and the weights of the ITN, finally reconciling the conflicting approaches. Moreover, it provides a general and simple theoretical explanation for the failure of economic models that do not explicitly focus on network topology: namely, their lack of topological invariance under a change of units.
    Date: 2015–06
  8. By: Jordi Brandts; Ayça Ebru Giritligil; Roberto A. Weber
    Abstract: In many areas of social life, individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network, then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment, four agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with three different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than under optimal updating. Our results are consistent with the model of “persuasion bias” of DeMarzo et al. (2003).
    Keywords: persuasion bias, experiments, bounded rationality
    JEL: C92 D03 D83
    Date: 2015–05
  9. By: Takayuki Mizuno (National Institute of Informatics, Department of Informatics, SOKENDAI, PRESTO, Japan Science and Technology Agency, The Canon Institute for Global Studies,); Takaaki Ohnishi (Graduate School of Information Science and Technology, University of Tokyo, The Canon Institute for Global Studies,); Tsutomu Watanabe (Graduate School of Economics, University of Tokyo, The Canon Institute for Global Studies)
    Abstract: We investigate the structure of global inter-firm linkages using a dataset that contains information on business partners for about 400,000 firms worldwide, including all the firms listed on the major stock exchanges. Among the firms, we examine three networks, which are based on customer-supplier, licensee-licensor, and strategic alliance relationships. First, we show that these networks all have scale-free topology and that the degree distribution for each follows a power law with an exponent of 1.5. The shortest path length is around six for all three networks. Second, we show through community structure analysis that the firms comprise a community with those firms that belong to the same industry but different home countries, indicating the globalization of firms’ production activities. Finally, we discuss what such production globalization implies for the proliferation of conflict minerals (i.e., minerals extracted from conflict zones and sold to firms in other countries to perpetuate fighting) through global buyer-supplier linkages. We show that a limited number of firms belonging to some specific industries and countries plays an important role in the global proliferation of conflict minerals. Our numerical simulation shows that regulations on the purchases of conflict minerals by those firms would substantially reduce their worldwide use.
    Keywords: Global supply chain, Inter-firm network, Scale-free, Community detection, Conflict minerals
    Date: 2015–03

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