nep-net New Economics Papers
on Network Economics
Issue of 2020‒07‒13
eight papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Brokerage By Choi, S.; Goyal, S.; Moisan, F.
  2. Network Topology and Market Structure By Chen, Ying-Ju; Zenou, Yves; Zhou, Junjie
  3. Consumption Insurance in Networks with Asymmetric Information By Orazio Attanasio; Sonya Krutikova
  4. The Tradeoff between Indirect Network Effects and Product Differentiation in a Decarbonized Transport Market By Gøril L. Andreassen; Knut Einar Rosendahl
  5. Explanatory Item Response Models for Dyadic Data from Multiple Groups By Murphy, James
  6. Coordination and Contagion: Individual Connections and Peer Mechanisms in a Randomized Field Experiment By Philip Babcock; Kelly Bedard; Stefanie Fischer; John Hartman
  7. From Pink-Collar to Lab Coat. Cultural Persistence and Diffusion of Socialist Gender Norms By Naomi Friedman-Sokuler; Claudia Senik
  8. Performance Feedback and Peer Effects By Marie Claire Villeval

  1. By: Choi, S.; Goyal, S.; Moisan, F.
    Abstract: Dominant intermediaries are a defining feature of the modern economy. This paper studies the mechanisms that give rise to trading networks with a dominant intermediary. Trades between actors require a direct link or a path that involves intermediaries. Links are costly. Efficiency therefore pushes towards connected networks with few links: this set includes the hub-spoke network, the cycle network and their variants. The hub-spoke network exhibits extreme inequality, while the cycle network yields equal payoffs for all traders. We conduct a large scale experiment on link formation among traders; the game takes place in continuous time and allows for asynchronous choices. The main finding is that the pricing protocol - the rule dividing the surplus between traders and intermediaries - determines which of these two networks arises.
    JEL: C92 D83 D85 Z13
    Date: 2020–01–20
  2. By: Chen, Ying-Ju; Zenou, Yves; Zhou, Junjie
    Abstract: We develop a two-stage oligopolistic network competition model where, first, firms simultaneously determine their prices and, then, users connected through a network determine their product's consumption. We show that denser networks (network topology) reduce prices and that a higher number of firms (market structure) reduces prices only when competition is weak. However, the price for the most influential users can increase with the number of firms when competition is very fierce and when there are enough network externalities. We also show that increasing competition always leads to a lower firm's profit while increasing network density leads to a clockwise rotation of the profit curve as a function of the number of firms. Finally, we study the effect of network topology and market structure on price dispersion and determine the optimal network structure from the perspective of both firms and users.
    Keywords: competitive pricing; Entry; market structure; optimal network structure
    JEL: D43 D85 L13 L14
    Date: 2020–03
  3. By: Orazio Attanasio; Sonya Krutikova
    Abstract: This paper uses a dataset from Tanzania that contains information on consumption, income and income shocks within and across family networks. A unique feature of this data is that it contains data on the degree of information existing between each pair of households within family networks. We use these data to construct a novel measure of the quality of information both at the level of household pairs and at the level of the network. We study risk sharing within these networks and explore whether the rejection of perfect risk sharing that we observe can be related to imperfections in the information network members have about each. We show that households within family networks with better information are less vulnerable to idiosyncratic shocks. Next, using the same information, we characterise the position of households within the family net- works constructing measures of network centrality. We show that more central households within networks are less vulnerable to idiosyncratic shocks.
    JEL: O10 O15
    Date: 2020–05
  4. By: Gøril L. Andreassen; Knut Einar Rosendahl
    Abstract: What factors determine whether it is optimal with one or more technologies in a decarbonized road transport sector, and what policies should governments choose? We investigate these questions theoretically and numerically through a static, partial equilibrium model for the road transport market. We find that two important factors that determine whether it will be and whether it should be one or more technologies are how close substitutes the two vehicle technologies are and the number of vehicles of the other technology. Our numerical results indicate that with two incompatible networks, two differentiated goods are optimal compared to only one if they are not too close substitutes. The first-best policy is a subsidy of the markup on charging and filling, where the markup is higher the higher the increased utility of more stations. In addition, to avoid an unwanted lock-in, a temporary stimulus may be needed to reach the stable equilibrium.
    Keywords: ndirect network effects, decarbonisation, climate policy, electric vehicles, hydrogen vehicles
    JEL: H23 L14 L91 Q58
    Date: 2020
  5. By: Murphy, James
    Abstract: Like other quantitative social scientists, network researchers benefit from pooling information from multiple observed variables to infer underlying (latent) attributes or social processes. Appropriate network data for this task is increasingly available. The inherent dependencies in relational data, however, pose unique challenges. This is especially true for those involved in the ascendant tasks of cross-network comparisons or multilevel network analysis. The author draws on item response theory and multilevel (mixed effects) modeling to propose a methodological approach that accounts for these dependencies and allows the analyst to model variation of latent dyadic traits across relations, actors, and groups precisely and parsimoniously. Examples demonstrate the approach’s utility for three important research areas: tie strength in adolescent friendships, group differences in how discussing personal problems relates to tie strength, and the analysis of multiple relations.
    Date: 2020–05–17
  6. By: Philip Babcock (Department of Economics, University of California, Santa Barbara); Kelly Bedard (Department of Economics, University of California, Santa Barbara); Stefanie Fischer (Department of Economics, California Polytechnic State University); John Hartman (Department of Economics, University of California, Santa Barbara)
    Abstract: This paper investigates peer effects at the level of individual connections, leveraging the approach to shed light on peer mechanisms. In a field experiment using college freshmen, we elicited best friends and offered monetary incentives for gym visits to a treated subset. We find large spillovers from treated subjects to treated best friends but none from treated subjects to control best friends. We also find evidence of a mechanism: Subjects coordinate by visiting the gym with best friends, indicating that the intervention harnesses complementarities in utility or commitment mechanisms. Results highlight subtle peer effects and mechanisms that often go undetected.
    Date: 2019
  7. By: Naomi Friedman-Sokuler (Bar-Ilan University [Israël]); Claudia Senik (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, USPC - Université Sorbonne Paris Cité)
    Abstract: The fall of the Iron Curtain in 1989 led to a massive migration wave from the Former Soviet Union (FSU) to Israel. We document the persistence and transmission of the Soviet unconventional gender norms, both vertically across generations of immigrants, and horizontally through neighborhood and school peer effects. Tracking the educational and occupational choices of a cohort of young Israeli women, we identify the persistence of two important features of the Soviet culture: the prioritization of science and technology, and the strong female attachment to paid-work. Women born in the FSU, who immigrated in infancy, are significantly more likely than natives and other immigrants to major in STEM in high school. In tertiary education, they remain over-represented in STEM, but also differ significantly from other women by their specific avoidance of study fields leading to "pink collar" jobs, such as education and social work. They also display a specific choice of work-life balance reflecting a greater commitment to paid-work. Finally, the choice patterns of native women shift towards STEM and away from traditional female study fields as the share of FSU immigrants in their lower-secondary school increases.
    Keywords: culture,gender norms,education,STEM,occupational choice,immigration,Soviet Union,Israel
    Date: 2020–06
  8. By: Marie Claire Villeval (Univ Lyon, Centre National de la Recherche Scientifique (CNRS), GATE UMR 5824, 93 Chemin des Mouilles, F-69130, Ecully, France. IZA, Bonn, Germany)
    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 anti-social 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
    JEL: C9 D91 J3 M5
    Date: 2020

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