nep-net New Economics Papers
on Network Economics
Issue of 2020‒03‒16
eleven papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Peer Effects in Networks: A Survey By Bramoullé, Yann; Djebbari, Habiba; Fortin, Bernard
  2. Does participation in knowledge networks facilitate international market access? The case of offshore wind By Maria Tsouri; Jens Hanson; Håkon Endresen Normann
  3. Network Competition and Team Chemistry in the NBA By William C. Horrace; Hyunseok Jung; Shane Sanders
  4. Vertical integration and foreclosure: evidence from production network data By Boehm, Johannes; Sonntag, Jan
  5. Debt dynamics in Europe: a network general equilibrium GVAR approach By Michaelides, Panayotis G.; Tsionas, Efthymios G.; Konstantakis, Konstantinos N.
  6. The Social Lives of Married Women : Peer Effects in Female Autonomy and Investments in Children By Kandpal,Eeshani; Baylis,Kathy
  7. Intermediation in the Interbank Lending Market By Ben R. Craig; Yiming Ma
  8. The value of a peer By Ingo E. Isphording; Ulf Zölitz
  9. Financial replicator dynamics: emergence of systemic-risk-averting strategies By Indrajit Saha; Veeraruna Kavitha
  10. Vaccines at Work By Hoffmann, Manuel; Mosquera, Roberto; Chadi, Adrian
  11. Performance Feedback and Peer Effects By Marie Villeval

  1. By: Bramoullé, Yann (Laval University); Djebbari, Habiba (Aix-Marseille University); Fortin, Bernard (Université Laval)
    Abstract: We survey the recent, fast-growing literature on peer effects in networks. An important recurring theme is that the causal identification of peer effects depends on the structure of the network itself. In the absence of correlated effects, the reflection problem is generally solved by network interactions even in non-linear, heterogeneous models. By contrast, microfoundations are generally not identified. We discuss and assess the various approaches developed by economists to account for correlated effects and network endogeneity in particular. We classify these approaches in four broad categories: random peers, random shocks, structural endogeneity and panel data. We review an emerging literature relaxing the assumption that the network is perfectly known. Throughout, we provide a critical reading of the existing literature and identify important gaps and directions for future research.
    Keywords: assimilation, immigrant health advantage, ethnic attrition
    JEL: J15 J12 I14
    Date: 2020–01
  2. By: Maria Tsouri (TIK Centre for Technology Innovation and Culture, University of Oslo, Oslo, Norway); Jens Hanson (TIK Centre for Technology Innovation and Culture, University of Oslo, Oslo, Norway); Håkon Endresen Normann (TIK Centre for Technology Innovation and Culture, University of Oslo, Oslo, Norway)
    Abstract: This article explores the effects of knowledge network participation on firms` international market access. We use a unique dataset comprising Norwegian firm data on RD&D (research, development and demonstration) and market participation in offshore wind. The empirical results show that participating in pilot and demonstration projects positively affects firms’ presence in international markets, while we do not observe the same positive effect for R&D projects. However, the econometric evidence shows that increasing extents of international collaborators, particularly from countries with home markets, contributes to a positive effect of R&D project participation on market access, while negative effects are observed for domestic collaborators. The results suggest that transnational knowledge linkages constitute an important mechanism for international market access, especially for countries with weak or absent domestic markets. We suggest that RD&D policy design could benefit from ensuring international collaboration, particularly with partners in countries with domestic markets, and support for demonstration activities.
    Date: 2020–03
  3. By: William C. Horrace (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Hyunseok Jung (Department of Economics, University of Arkansas); Shane Sanders (Department of Sports Management, Syracuse University)
    Abstract: We consider a heterogeneous social interaction model where agents interact with peers within their own network but also interact with agents across other (non-peer) networks. To address potential endogeneity in the networks, we assume that each network has a central planner who makes strategic network decisions based on observable and unobservable characteristics of the peers in her charge. The model forms a simultaneous equation system that can be estimated by Quasi-Maximum Likelihood. We apply a restricted version of our model to data on National Basketball Association games, where agents are players, networks are individual teams organized by coaches, and competition is head-to-head. That is, at any time a player only interacts with two networks: their team and the opposing team. We find significant positive within-team peer-effects and both negative and positive opposing-team competitor-effects in NBA games. The former are interpretable as “team chemistries" which enhance the individual performances of players on the same team. The latter are interpretable as “team rivalries," which can either enhance or diminish the individual performance of opposing players.
    Keywords: Spatial Analysis, Peer Effects, Endogeneity, Machine Learning
    JEL: C13 C31 D24
    Date: 2020–03
  4. By: Boehm, Johannes; Sonntag, Jan
    Abstract: This paper studies the prevalence of vertical market foreclosure using a novel dataset on U.S. and international buyer-seller relationships, and across a large range of industries. We find that relationships are more likely to break when suppliers vertically integrate with one of the buyers' competitors than when they vertically integrate with an unrelated firm. This relationship holds for both domestic and cross-border mergers, and for domestic and international relationships. It also holds when instrumenting mergers using exogenous downward pressure on the supplier's stock prices, suggesting that reverse causality is unlikely to explain the result. In contrast, the relationship vanishes when using rumoured or announced but not completed integration events. Firms experience a substantial drop in sales when one of their suppliers integrates with one of their competitors. This sales drop is mitigated if the firm has alternative suppliers in place.
    Keywords: mergers and acquisitions; market foreclosure; vertical integration; production networks
    JEL: L14 L42
    Date: 2019–08
  5. By: Michaelides, Panayotis G.; Tsionas, Efthymios G.; Konstantakis, Konstantinos N.
    Abstract: In this work, we investigate the dynamic interdependencies among the EU12 economies using a competitive general equilibrium network system representation. Additionally, using Bayesian techniques, we estimate the autoregressive scheme that characterizes the equilibrium price system of the network, while characterizing each economy/node in the universe of our network in terms of its degree of pervasiveness. In this context, we unveil the dominant(s) unit(s) in our model and estimate the dynamic linkages between the economies/nodes. Lastly, in terms of robustness analysis, we compare the findings of the degree pervasiveness of each economy against other popular quantitative methods in the literature. According to our findings, the economy of Germany acts as weakly dominant entity in the EU12 economy. Meanwhile, all shocks die out in the short run, without any long lasting effect.
    Keywords: Bayesian; GVAR; Crisis; Transmission; Debt; EU12
    JEL: E1 O5
    Date: 2018–08–01
  6. By: Kandpal,Eeshani; Baylis,Kathy
    Abstract: In patriarchal societies, sticky norms affect married women's social circles, their autonomy, and the outcomes of intra-household bargaining. This paper uses primary data on women's social networks in Uttarakhand, India; the modal woman has only three friends, and over 80 percent do not have any friends of another caste. This paper examines the effect of a shock to friends'empowerment on a woman's autonomy, specifically physical mobility, access to social safety nets, and employment outside the household; perceived social norms; and an outcome of household bargaining: investments in her children. The analysis instruments for endogenous network formation using a woman's age and her caste network in the village. The key peer effect is the impact of having a friend who received an empowerment shock on a woman who did not receive that shock. The results show significant peer effects on only a few of the examined measures of women's autonomy. In contrast, peer effects exist on all considered outcomes of a daughters? diet and time spent on chores. The findings suggest a large decay rate between effects on own empowerment and peer effects. Interventions targeting child welfare through women's empowerment may generate second-order effects on intra-household decision-making, albeit with substantial decay rates, and thus benefit from targeted rather than randomized rollout. In contract, interventions on gender roles and women's autonomy may be limited by the stickiness of social norms.
    Keywords: Educational Sciences,Gender and Development,Hydrology,Services&Transfers to Poor,Access of Poor to Social Services,Economic Assistance,Disability,Health Care Services Industry
    Date: 2019–04–25
  7. By: Ben R. Craig (Indiana University Bloomington; Federal Reserve Bank; Deutsche Bundesbank); Yiming Ma
    Abstract: This paper studies systemic risk in the interbank market. We first establish that in the German interbank lending market, a few large banks intermediate funding flows between many smaller periphery banks and that shocks to these intermediary banks in the financial crisis spill over to the activities of the periphery banks. We then develop a network model in which banks trade off the costs and benefits of link formation to explain these patterns. The model is structurally estimated using banks’ preferences as revealed by the observed network structure in the precrisis period. It explains why the interbank intermediation arrangement arises, estimates the frictions underlying the arrangement, and quantifies how shocks are transmitted across the network. Model estimates based on precrisis data successfully predict changes in network-links and in lending arising from the crisis in out-of-sample tests. Finally, we quantify the systemic risk of a single intermediary and the impact of ECB funding in reducing this risk through model counterfactuals.
    Date: 2020–03–05
  8. By: Ingo E. Isphording; Ulf Zölitz
    Abstract: This paper introduces peer value-added, a new approach to quantify the total contribution of an individual peer to student performance. Peer value-added captures social spillovers irrespective of whether they are generated by observable or unobservable peer characteristics. Using data with repeated random assignment to university sections, we find that students significantly differ in their peer value-added. Peer value-added is a good out-of-sample predictor of performance spillovers in newly assigned student-peer pairs. Yet, students’ own past performance and other observable characteristics are poor predictors of peer value-added. Peer value-added increases after exposure to better peers, and valuable peers are substitutes for low-quality teachers.
    Keywords: Peer effects, peer value-added, peer capital, spillovers
    JEL: I21 I24 J24
    Date: 2020–03
  9. By: Indrajit Saha; Veeraruna Kavitha
    Abstract: We consider a random financial network with a large number of agents. The agents connect through credit instruments borrowed from each other or through direct lending, and these create the liabilities. The settlement of the debts of various agents at the end of the contract period can be expressed as solutions of random fixed point equations. Our first step is to derive these solutions (asymptotically), using a recent result on random fixed point equations. We consider a large population in which agents adapt one of the two available strategies, risky or risk-free investments, with an aim to maximize their expected returns (or surplus). We aim to study the emerging strategies when different types of replicator dynamics capture inter-agent interactions. We theoretically reduced the analysis of the complex system to that of an appropriate ordinary differential equation (ODE). We proved that the equilibrium strategies converge almost surely to that of an attractor of the ODE. We also derived the conditions under which a mixed evolutionary stable strategy (ESS) emerges; in these scenarios the replicator dynamics converges to an equilibrium at which the expected returns of both the populations are equal. Further the average dynamics (choices based on large observation sample) always averts systemic risk events (events with large fraction of defaults). We verified through Monte Carlo simulations that the equilibrium suggested by the ODE method indeed represents the limit of the dynamics.
    Date: 2020–02
  10. By: Hoffmann, Manuel (Texas A&M University); Mosquera, Roberto (Universidad de las Américas); Chadi, Adrian (University of Konstanz)
    Abstract: Influenza vaccination could be a cost-effective way to reduce costs in terms of human lives and productivity losses, but low take-up rates and vaccination unintentionally causing moral hazard may decrease its benefits. We ran a natural field experiment in cooperation with a bank in Ecuador, where we modified its vaccination campaign. Experimentally manipulating incentives to participate in this health intervention allows us to study peer effects with organizational data and to determine the personal consequences of being randomly encouraged to get vaccinated. We find that assigning employees to get vaccinated during the workweek roughly doubled take-up compared to employees assigned to the weekend, which indicates that reducing opportunity costs plays an important role in increasing vaccination rates. Coworker take-up also increased individual take-up significantly and is driven by social norms. Contrary to the company's expectation, vaccination did not reduce sickness absence during the flu season. Getting vaccinated was ineffective with no measurable health externalities from coworker vaccination. We rule out meaningful individual health effects when considering several thresholds of expected vaccine effectiveness. Using a dataset of administrative records on medical diagnoses and employee surveys, we find evidence consistent with vaccination causing moral hazard, which could decrease the effectiveness of vaccination.
    Keywords: health intervention, flu vaccination, sickness-related absence, field experiment, random encouragement design, moral hazard, technology adoption
    JEL: D90 I12 J01 N36
    Date: 2020–01
  11. By: Marie Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper reviews studies conducted in naturally-occurring work environments or in the laboratory on the impact of performance feedback provision and peer effects on individuals' performance. First, it discusses to which extent feedback on absolute performance affects individuals' effort for cognitive or motivational reasons, and how evaluations can be distorted strategically. Second, this paper highlights the positive and negative effects of feedback on relative performance and rank on individuals' productivity and persistence, but also on the occurrence of antisocial behavior. Relative feedback stimulates effort by informing on the marginal return or the marginal cost of effort, and by activating behavioral forces even in the absence of monetary incentives. These behavioral mechanisms relate to self-esteem, status concerns, competitive preferences and social learning. Relative feedback sometimes discourages or distorts effort, notably if people collude or are disappointment averse. In addition to incentive schemes and social preferences, the management of self-confidence affects the way relative feedback impacts productivity. Third, the paper addresses the question of the identification of peer effects on employees' performance, their size, their direction and their heterogeneity along the hierarchy. The mechanisms behind peer effects include conformism, social pressure, rivalry, social learning and distributional preferences, depending on the presence of payoff externalities or technological and organizational externalities..
    Keywords: Feedback,performance,peer effects
    Date: 2020

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