nep-net New Economics Papers
on Network Economics
Issue of 2018‒09‒17
five papers chosen by
Pedro CL Souza
Pontifícia Universidade Católica do Rio de Janeiro

  1. Leaders in Juvenile Crime By Díaz, Carlos; Patacchini, Eleonora; Verdier, Thierry; Zenou, Yves
  2. Just a Few Seeds More: Value of Network Information for Diffusion By Akbarpour, Mohammad; Malladi, Suraj; Saberi, Amin
  3. Incarceration Spillovers in Criminal and Family Networks By Bhuller, Manudeep; Dahl, Gordon B; Løken, Katrine V.; Mogstad, Magne
  4. Efficient Partnership Formation in Networks By Bloch, Francis; Dutta, Bhaskar; Manea, Mihai
  5. Insurance in extended family networks By Orazio Attanasio; Costas Meghir; Corina Mommaerts

  1. By: Díaz, Carlos; Patacchini, Eleonora; Verdier, Thierry; Zenou, Yves
    Abstract: This paper presents a new theory of crime where leaders transmit a crime technology and act as a role model for other criminals. We show that, in equilibrium, an individual's crime effort and crime decisions depend on the geodesic distance to the leader in his or her network of social contacts. By using data on friendship networks among U.S. high-school students, we structurally estimate the model and find evidence supporting its predictions. In particular, by using a definition of a criminal leader that is exogenous to the network formation of friendship links, we find that the longer is the distance to the leader, the lower is the criminal activity of the delinquents and the less likely they are to become criminals. This result highlights the importance of the closeness centrality of the leaders in explaining criminal behaviors. We finally perform a counterfactual experiment that reveals that a policy that removes all criminal leaders from a school can, on average, reduce criminal activity by about 20% and the individual probability of becoming a criminal by 10%.
    Keywords: closeness centrality; Crime leaders; criminal decision; social distance
    JEL: C31 D85 K42
    Date: 2018–08
  2. By: Akbarpour, Mohammad (Stanford U); Malladi, Suraj (Stanford U); Saberi, Amin (Stanford U)
    Abstract: Identifying the optimal set of individuals to first receive information ('seeds') in a social network is a widely-studied question in many settings, such as the diffusion of information, microfinance programs, and new technologies. Numerous studies have proposed various network-centrality based heuristics to choose seeds in a way that is likely to boost diffusion. Here we show that, for some frequently studied diffusion processes, randomly seeding s plus x individuals can prompt a larger cascade than optimally targeting the best s individuals, for a small x. We prove our results for large classes of random networks, but also show that they hold in simulations over several real-world networks. This suggests that the returns to collecting and analyzing network information to identify the optimal seeds may not be economically significant. Given these findings, practitioners interested in communicating a message to a large number of people may wish to compare the cost of network-based targeting to that of slightly expanding initial outreach.
    JEL: D83 D85 O12 Z13
    Date: 2018–04
  3. By: Bhuller, Manudeep (University of Oslo); Dahl, Gordon B (UC San Diego); Løken, Katrine V. (Dept. of Economics, Norwegian School of Economics and Business Administration); Mogstad, Magne (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Using quasi-random assignment of criminal cases to judges, we estimate large incarceration spillovers in criminal and brother networks. When a defendant is sent to prison, there are 51 and 32 percentage point reductions in the probability his criminal network members and younger brothers will be charged with a crime, respectively, over the ensuing four years. Correlational evidence misleadingly finds small positive effects. These spillovers are of first order importance for policy, as the network reductions in future crimes committed are larger than the direct effect on the incarcerated defendant.
    Keywords: Incarceration; peer effects; criminal networks
    JEL: K42
    Date: 2018–07–25
  4. By: Bloch, Francis (Université Paris 1 and Paris School of Economics); Dutta, Bhaskar (University of Warwick and Ashoka University); Manea, Mihai (Stanford University)
    Abstract: We analyze the formation of partnerships in social networks. Players need favors at random times and ask their neighbors in the network to form exclusive long-term partnerships that guarantee reciprocal favor exchange. Refusing to provide a favor results in the automatic removal of the under lyinglink. When favors are costly, players agree to provide the first favor in a partnership only if they otherwise face the risk of eventual solitude. In equilibrium,the players essential for realizing every maximum matching can avoid this risk and enjoy higher payoffs than in essential players. Although the search for partners is decentralized and reflects local incentives, the strength of essential players drives efficient partnership formation in everynetwork. When favors are costless, players enter partnerships at any opportunity and every maximal matching can emerge in equilibrium.In this case,efficiency is limited to special linking patterns : complete and complete bipartite networks, locally balanced biprtit enetworks with positive surplus, and factor-critical networks. JEL classification numbers: D85 ; C78
    Keywords: networks ; partnerships ; matchings ; efficiency ; decentralizedmarkets ; favor exchange ; completely elementary networks ; locally balanced networks
    Date: 2018
  5. By: Orazio Attanasio (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Corina Mommaerts (Institute for Fiscal Studies)
    Abstract: We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each component is insured. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the Panel Study of Income Dynamics. We find that over 60% of shocks to household income are potentially insurable within extended family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks.
    Date: 2018–07–11

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