nep-net New Economics Papers
on Network Economics
Issue of 2019‒10‒21
two papers chosen by
Pedro CL Souza
University of Warwick

  1. Debunking Rumors in Networks By Luca Paolo Merlino; Nicole Tabasso
  2. History Dependence, Cohort Attachment, and Job Referrals in Networks of Close Relationships By Ayal Y. Chen-Zion; James E. Rauch

  1. By: Luca Paolo Merlino (Department of Economics University of Antwerp, Antwerp, Belgium; Université Paris 1-Panthéon Sorbonne); Nicole Tabasso (Department of Economics Ca' Foscari University of Venice; School of Economics, University of Surrey)
    Abstract: We study the diffusion of a true and a false opinion (the rumor) in a social network. Upon hearing an opinion, individuals may believe it, disbelieve it, or debunk it through costly verification. Whenever the truth survives in steady state, so does the rumor. Online social communication exacerbates relative rumor prevalence as long as it increases homophily or verification costs. Our model highlights that successful policies in the fight against rumors increase individuals’ incentives to verify.
    Keywords: Social Networks, Rumors, Verification
    JEL: D83 D85
    Date: 2019
  2. By: Ayal Y. Chen-Zion; James E. Rauch
    Abstract: We model network formation in a firm. Agents learn about the quality of their working relationships with each other. Their good relationships become their networks. Accumulating relationships becomes increasingly costly, however. Over time agents become less open to forming relationships with others unknown to them, leading their networks to be front-loaded with agents they met near the beginning of their careers. The interaction of this dynamic with turnover yields predictions about the time pattern of history dependence in an agent’s network as a function of his tenure. Mutual openness of newly arrived agents in a firm also leads to the cross-section prediction of “cohort attachment,” a tendency for members of an agent’s hiring cohort to be disproportionately represented in his network. When members of a network formed within a firm are subsequently split across many firms, the desire to renew their successful working relationships can lead to job referrals. Former co-workers who provide referrals will be drawn disproportionately from the referred workers’ hiring cohorts at their previous employers.
    JEL: D85 J63 J64
    Date: 2019–10

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