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on Network Economics |
| By: | Edoardo Gallo; Alastair Langtry |
| Abstract: | In recent years online social networks have become increasingly prominent in political campaigns and, concurrently, several countries have experienced shock election outcomes. This paper proposes a model that links these two phenomena. In our set-up, the process of learning from others on a network is influenced by confirmation bias, i.e. the tendency to ignore contrary evidence and interpret it as consistent with one's own belief. When agents pay enough attention to themselves, confirmation bias leads to slower learning in any symmetric network, and it increases polarization in society. We identify a subset of agents that become more/less influential with confirmation bias. The socially optimal network structure depends critically on the information available to the social planner. When she cannot observe agents' beliefs, the optimal network is symmetric, vertex-transitive and has no self-loops. We explore the implications of these results for electoral outcomes and media markets. Confirmation bias increases the likelihood of shock elections, and it pushes fringe media to take a more extreme ideology. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2011.00520&r=all |
| By: | Alison Andrew; Orazio Attanasio; Britta Augsburg; Jere Behrman; Monimalika Day; Pamela Jervis; Costas Meghir; Angus Phimister |
| Abstract: | Social connections are fundamental to human wellbeing. This paper examines the social networks of young married women in rural Odisha, India. This is a group for whom highly-gendered norms around marriage, mobility and work are likely to shape opportunities to form and maintain meaningful ties with other women. We track the social networks of 2,170 mothers over four years, and find a high degree of isolation. Wealthier women and women from more-advantaged castes and tribes have smaller social networks than their less-advantaged peers. These gradients are primarily driven by the fact that more-advantaged women are less likely to know other women within the same socioeconomic group than are less-advantaged women. There exists strong homophily by socioeconomic status (SES) that is symmetric across socioeconomic groups. Mediation analysis shows that SES differences in social isolation are strongly associated with ownership of toilets and labor force participation. Further research should investigate the formation and role of female networks. |
| JEL: | D13 D71 O1 O35 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28049&r=all |
| By: | Julian di Giovanni; Galina Hale |
| Abstract: | We quantify the role of global production linkages in explaining spillovers of U.S. monetary policy shocks to stock returns of fifty-four sectors in twenty-six countries. We first present a conceptual framework based on a standard open-economy production network model that delivers a spillover pattern consistent with a spatial autoregression (SAR) process. We then use the SAR model to decompose the overall impact of U.S. monetary policy on stock returns into a direct and a network effect. We find that up to 80 percent of the total impact of U.S. monetary policy shocks on average country-sector stock returns is due to the network effect of global production linkages. We further show that U.S. monetary policy shocks have a direct impact predominantly on U.S. sectors and then propagate to the rest of the world through the global production network. Our results are robust to controlling for correlates of the global financial cycle, foreign monetary policy shocks, and to changes in variable definitions and empirical specifications. |
| Keywords: | global production network; asset prices; monetary policy shocks |
| JEL: | G15 F10 F36 |
| Date: | 2020–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:89010&r=all |
| By: | Zaharieva, Anna; Neugart, Michael |
| Abstract: | Empirical studies show that women are under-represented in highly paid top management positions of firms (glass-ceiling effect) which could be a cause of the gender wage gap. In order to study women's career paths, we develop a search and matching model where job ladders consist of three hierarchical levels and workers can progress in the career by means of internal promotions and job-to-job mobility. Both, formal applications and referral hiring via endogenous social networks, can be used for external moves between firms. We show that when female workers are the minority in the occupation and social link formation is gender-biased (homophily) there are too few female contacts in the social networks of their male colleagues. This disadvantage implies that female workers are referred less often and, thereby, become under-represented in top level management positions of firms. Our results suggest that endogenously forming homophilous social networks when female workers are the minority can explain a substantial part of the empirically observable total wage gap stemming from the glass-ceiling effect. In addition, we demonstrate that the effects on an unequal gender-representation are amplified by stronger clustering of social networks, and gender-biased promotion times. Furthermore, deeper hierarchical firm structures amplify the network-driven gender inequality but mitigate inequality arising from direct discrimination in internal promotions. |
| Keywords: | glass-ceiling effect,networks,discrimination,theory of the firm,promotions,search-and-matching labor market |
| JEL: | D21 D85 J31 J63 J71 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224534&r=all |
| By: | Laurent Feuilloley (UCHILE - Universidad de Chile = University of Chile [Santiago]); Pierre Fraigniaud (IRIF (UMR_8243) - Institut de Recherche en Informatique Fondamentale - CNRS - Centre National de la Recherche Scientifique - UP - Université de Paris); Pedro Montealegre (Universidad Adolfo Ibáñez [Santiago]); Ivan Rapaport (CMM - Centre de modélisation mathématique - Universitad de Chile - CNRS - Centre National de la Recherche Scientifique); Éric Rémila (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); Ioan Todinca (LIFO - Laboratoire d'Informatique Fondamentale d'Orléans - UO - Université d'Orléans - INSA CVL - Institut National des Sciences Appliquées - Centre Val de Loire - INSA - Institut National des Sciences Appliquées) |
| Abstract: | Naor, Parter, and Yogev (SODA 2020) have recently demonstrated the existence of a distributed interactive proof for planarity (i.e., for certifying that a network is planar), using a sophisticated generic technique for constructing distributed IP protocols based on sequential IP protocols. The interactive proof for planarity is based on a distributed certification of the correct execution of any given sequential linear-time algorithm for planarity testing. It involves three interactions between the prover and the randomized distributed verifier (i.e., it is a dMAM protocol), and uses small certificates, on O(log n) bits in n-node networks. We show that a single interaction from the prover suffices, and randomization is unecessary, by providing an explicit description of a proof-labeling scheme for planarity, still using certificates on just O(log n) bits. We also show that there are no proof-labeling schemes-in fact, even no locally checkable proofs-for planarity using certificates on o(log n) bits. |
| Date: | 2020–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02991868&r=all |
| By: | Vinay Reddy Venumuddala |
| Abstract: | In this study we arrive at a closed form expression for measuring vector assortativity in networks motivated by our use-case which is to observe patterns of social mobility in a society. Based on existing works on social mobility within economics literature, and social reproduction within sociology literature, we motivate the construction of an occupational network structure to observe mobility patterns. Basing on existing literature, over this structure, we define mobility as assortativity of occupations attributed by the representation of categories such as gender, geography or social groups. We compare the results from our vector assortativity measure and averaged scalar assortativity in the Indian context, relying on NSSO 68th round on employment and unemployment. Our findings indicate that the trends indicated by our vector assortativity measure is very similar to what is indicated by the averaged scalar assortativity index. We discuss some implications of this work and suggest future directions. |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2011.04466&r=all |
| By: | Hoffmann, Till; Jones, Nick S. |
| Abstract: | How people connect with one another is a fundamental question in the social sciences, and the resulting social networks can have a profound impact on our daily lives. Blau offered a powerful explanation: people connect with one another based on their positions in a social space. Yet a principled measure of social distance, allowing comparison within and between societies, remains elusive. We use the connectivity kernel of conditionally independent edge models to develop a family of segregation statistics with desirable properties: they offer an intuitive and universal characteristic scale on social space (facilitating comparison across datasets and societies), are applicable to multivariate and mixed node attributes, and capture segregation at the level of individuals, pairs of individuals and society as a whole. We show that the segregation statistics can induce a metric on Blau space (a space spanned by the attributes of the members of society) and provide maps of two societies. Under a Bayesian paradigm, we infer the parameters of the connectivity kernel from 11 ego-network datasets collected in four surveys in the UK and USA. The importance of different dimensions of Blau space is similar across time and location, suggesting a macroscopically stable social fabric. Physical separation and age differences have the most significant impact on segregation within friendship networks with implications for intergenerational mixing and isolation in later stages of life. |
| Keywords: | social networks; segregation; ego networks; inference |
| JEL: | C1 Z13 |
| Date: | 2020–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103852&r=all |
| By: | Rode, Johannes; Müller, Sven |
| Abstract: | We study variation of peer effects in rooftop photovoltaic adoption by households. Our investigation employs geocoded data on all potential adopters and on all grid-connected photovoltaic systems set up in Germany through 2010. We construct an individual measure of peer effects for each potential adopter. For identification, we exploit exogenous variation in two dimensions of photovoltaic system roof appropriateness of neighbors: their inclination and their orientation. Using discrete choice models with panel data, we find evidence for causal peer effects. However, the impact of one previously installed PV system on current adoption decreases over time. We also show that visible PV systems cause an increase in the odds of installing which is up to three times higher in comparison to all PV systems. At rural locations visibility may be less important, which indicates that word-of-mouth communication plays a stronger role. |
| Keywords: | Causal peer effects,installed base,discrete choice,technology adoption and diffusion,solar photovoltaic panels,visibility |
| JEL: | O33 C35 Q55 R10 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224644&r=all |
| By: | Cloos, Janis; Greiff, Matthias; Rusch, Hannes |
| Abstract: | We examine geographical concentration, scientific quality, and editorial favoritism in the field of experimental economics. We use a novel data set containing all original research papers (𝑁 = 583) that exclusively used laboratory experiments for data generation and were published in the American Economic Review, Experimental Economics or the Journal of the European Economic Association between 1998 and 2018. The development of geographical concentration is examined using data on authors' affiliations at the time of the respective publication. Results show that research output produced by US-affiliated economists increased slower than overall research output, leading to a decrease in geographical concentration. Several proxies for scientific quality indicate that experiments conducted in Europe are of higher quality than experiments conducted in North America: European experiments rely on a larger total number of participants as well as participants per treatment, and receive more citations compared to experiments conducted in North America. Examining laboratory experiments published in the AER more closely, we find that papers authored by economists with US-affiliations receive significantly fewer citations in the first 5 and 10 years after publication compared to papers by authors from the rest of the world. |
| Keywords: | laboratory experiments,favoritism,geographical concentration,methodological standards,network effects |
| JEL: | A11 A14 C90 I23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224565&r=all |
| By: | Fricke, Daniel; Wilke, Hannes |
| Abstract: | Investment funds are highly connected with each other, but also with the broader financial system. In this paper, we quantify potential vulnerabilities arising from funds' connectedness. While previous work exclusively focused on indirect connections (overlapping asset portfolios) between investment funds, we develop a macroprudential stress test that also includes direct connections (cross-holdings of fund shares). In our application for German investment funds, we find that these direct connections are very important from a financial stability perspective. Our main result is that the German fund sector's aggregate vulnerability can be substantial and tends to increase over time, suggesting that the fund sector can amplify adverse developments in global security markets. We also highlight spillover risks to the broader financial system, since fund sector losses would be largely borne by fund investors from the financial sector. Overall, we make an important step towards a more financial-system-wide view on fund sector vulnerabilities. |
| Keywords: | asset management,investment funds,systemic risk,fire sales,liquidity risk,cross-holdings,spillover effects |
| JEL: | G10 G11 G23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc20:224511&r=all |