nep-net New Economics Papers
on Network Economics
Issue of 2017‒02‒19
five papers chosen by
Pedro CL Souza
Pontifícia Universidade Católica do Rio de Janeiro

  1. The Swing Voter's Curse in Social Networks By Buechel, Berno; Mechtenberg, Lydia
  2. Political Competition with Endogenous Party Formation and Citizen Activists By Hansen, Emanuel
  3. How do inventor networks affect urban invention? By Laurent BERGÉ; Pascale ROUX; Nicolas CARAYOL
  4. Estimation and model-based combination of causality networks By Bonaccolto, Giovanni; Caporin, Massimiliano; Panzica, Roberto Calogero
  5. Social Ties and Favoritism in Chinese Science By Raymond Fisman; Jing Shi; Yongxiang Wang; Rong Xu

  1. By: Buechel, Berno; Mechtenberg, Lydia
    Abstract: We study private communication in social networks prior to a majority vote on two alternative policies. Some (or all) agents receive a private imperfect signal about which policy is correct. They can, but need not, recommend a policy to their neighbors in the social network prior to the vote. We show theoretically and empirically that communication can undermine efficiency of the vote and hence reduce welfare in a common interest setting. Both efficiency and existence of fully informative equilibria in which vote recommendations are always truthfully given and followed hinge on the structure of the communication network. If some voters have distinctly larger audiences than others, their neighbors should not follow their vote recommendation; however, they may do so in equilibrium. We test the model in a lab experiment and strong support for the comparative-statics and, more generally, for the importance of the network structure for voting behavior.
    Keywords: Strategic Voting, Social Networks, Swing Voter's Curse, Information Aggregation, Research Methods/ Statistical Methods, D72, D83, D85, C91,
    Date: 2017–02–08
  2. By: Hansen, Emanuel
    Abstract: The paper studies political competition between endogenously formed parties instead of independent candidates. Party formation allows policy-motivated citizens to nominate one of their fellow party members as their candidate for a general election and to share the cost of running in this election. Thus, like-minded citizens are able to coordinate their political behavior in order to improve the policy outcome. The paper focuses on political equilibria with two active parties, and investigates the properties of stable parties and the policy platforms offered in equilibrium. The platforms of both parties can neither be fully convergent as in the median voter model (Downs 1957) nor extremely polarized as in the citizen candidate model (Besley & Coate 1997). In the benchmark case of full electoral certainty, a unique political equilibrium with positive platform distance exists. Endogenous party formation thus eliminates a major weakness of the citizen candidate model, the extreme multiplicity of equilibria. The model remains tractable, and the qualitative results are shown to be robust under the assumption of electoral uncertainty, where vote results cannot be perfectly predicted.
    JEL: D72 D78 C72
    Date: 2016
  3. By: Laurent BERGÉ; Pascale ROUX; Nicolas CARAYOL
    Abstract: Social networks are expected to matter for invention in cities, but empirical evidence is still puzzling. In this paper, we provide new results on urban patenting covering more than twenty years of European patents invented by nearly one hundred thousand inventors located in France. Elaborating on the recent economic literatures on peer effects and on games in social networks, we assume that the productivity of an inventor\'s efforts is positively affected by the efforts of his or her partners and negatively by the number of these partners\' connections. In this framework, inventors\' equilibrium outcomes are proportional to the square of their network centrality, which encompasses, as special cases, several well-known forms of centrality (Degree, Katz-Bonacich, Page-Rank). Our empirical results show that urban inventors benefit from their collaboration network. Their productivity increases when they collaborate with more central agents and when they have more collaborations. Our estimations suggest that inventors\' productivity grows sublinearly with the efforts of direct partners, and that they incur no negative externality from them having many partners. Overall, we estimate that a one standard deviation increase in local inventors\' centrality raises future urban patenting by 13%.
    Keywords: invention, cities, network centrality, co-invention network, patent data
    JEL: O31 R11 D85
    Date: 2017
  4. By: Bonaccolto, Giovanni; Caporin, Massimiliano; Panzica, Roberto Calogero
    Abstract: Causality is a widely-used concept in theoretical and empirical economics. The recent financial economics literature has used Granger causality to detect the presence of contemporaneous links between financial institutions and, in turn, to obtain a network structure. Subsequent studies combined the estimated networks with traditional pricing or risk measurement models to improve their fit to empirical data. In this paper, we provide two contributions: we show how to use a linear factor model as a device for estimating a combination of several networks that monitor the links across variables from different viewpoints; and we demonstrate that Granger causality should be combined with quantile-based causality when the focus is on risk propagation. The empirical evidence supports the latter claim.
    Keywords: granger causality,quantile causality,multi-layer network,network combination
    JEL: C58 C31 C32 G01
    Date: 2017
  5. By: Raymond Fisman; Jing Shi; Yongxiang Wang; Rong Xu
    Abstract: We study favoritism via hometown ties, a common source of favor exchange in China, in fellow selection of the Chinese Academies of Sciences and Engineering. Hometown ties to fellow selection committee members increase candidates' election probability by 39 percent, coming entirely from the selection stage involving an in-person meeting. Elected hometown-connected candidates are half as likely to have a high-impact publication as elected fellows without connections. CAS/CAE membership increases the probability of university leadership appointments and is associated with a US$9.5 million increase in annual funding for fellows' institutions, indicating that hometown favoritism has potentially large effects on resource allocation.
    JEL: J71 O3 P16
    Date: 2017–02

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