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on Network Economics |
| By: | Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - 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); Xavier Venel (LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma]) |
| Abstract: | We analyze whether random network formation processes, such as preferential attachment, can emerge as the outcome of strategic behaviour. We represent network formation as an extensive game in which players sequentially form links as they enter the network. In this setting, we investigate under which conditions subgame perfect equilibria of the game are observationally equivalent with random network formation process. We put forward two structural conditions that are necessary in this respect. First, players must have some form of imperfect information as randomization is purposeful only if its realization is not perfectly observed by the other players. Second, there must be some form of competition between a player and its successors: a player has incentives to reduce the information available to its successors only to the extent that their objectives are in opposition. Accordingly, we put forward a class of games where players compete with their predecessors and their successors for the costs and benefits induced by link formation and show that subgame perfect equilibria of this game are observationally equivalent with random network formation process. In particular, when linkage costs are inversely proportional to the degree of a node, equilibrium play induces a preferential attachment process. This provides a positive answer to the question of the existence of strategic foundations for preferential attachment. However the very specific conditions requiredfor the observational equivalence to hold suggest that preferential attachment can be explained by strategic considerations only in a limited number of situations. |
| Keywords: | Game theory, Socio-economic networks, Endogenous network formation, Preferential attachment, Extensive games |
| Date: | 2022–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-03881328&r=net |
| By: | Attila Gyetvai; Maria Zhu |
| Abstract: | Which former coworkers help displaced workers find jobs? We answer this question by studying occupational similarity in job finding networks. Using matched employer-employee data from Hungary, this paper relates the unemployment duration of displaced workers to the employment rate of their former coworker networks. We find that while coworkers from all occupations are helpful in job finding, there is significant heterogeneity in effects by occupation skill-level. For workers in low-skill jobs, coworkers in the same narrow occupation as the displaced worker are the most useful network contacts. For workers in high-skill jobs, coworkers from different occupations help the most. |
| JEL: | D85 J24 J64 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202216&r=net |
| By: | Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - 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); Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - 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); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - 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) |
| Abstract: | We propose a model of the joint evolution of opinions and social relationships in a setting where social influence decays over time. The dynamics are based on bounded confidence: social connections between individuals with distant opinions are severed while new connections are formed between individuals with similar opinions. Our model naturally gives raise to strong diversity, i.e., the persistence of heterogeneous opinions in connected societies, a phenomenon that most existing models fail to capture. The intensity of social interactions is the key parameter that governs the dynamics. First, it determines the asymptotic distribution of opinions. In particular, increasing the intensity of social interactions brings society closer to consensus. Second, it determines the risk of polarization, which is shown to increase with the intensity of social interactions. Our results allow to frame the problem of the design of public debates in a formal setting. We hence characterize the optimal strategy for a social planner who controls the intensity of the public debate and thus faces a trade-off between the pursuit of social consensus and the risk of polarization. We also consider applications to political campaigning and show that both minority and majority candidates can have incentives to lead society towards polarization. |
| Keywords: | opinion dynamics, network formation, network fragility, polarization, institution design, political campaign |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-03881461&r=net |
| By: | Kim, Jisoo (Korea Institute for Industrial Economics and Trade); Byeon, Chang-Uk (Korea Institute for Industrial Economics and Trade) |
| Abstract: | A cluster is a geographic concentration of interconnected companies and associated institutions in a particular field. It is widely accepted that clusters generate better economic performance than simple aggregations of companies, as mutual influence between clustered firms makes knowledge sharing and diffusion much easier. In this process, the novelty and diversity of accumulated knowledge is an important source of sustainable innovation and growth for the cluster. The more diversified the combined knowledge, the greater the scope and possibility of new knowledge creation. This study focuses on the relationship between cluster growth, knowledge heterogeneity and knowledge networks. First, we measure the degree of knowledge heterogeneity for each regional cluster, and verify the relationship between cluster growth and heterogeneity through empirical analysis. By analyzing this relationship for each life-cycle of a cluster, we place particular emphasis on understanding the development factor of the cluster. Second, we investigate the role of knowledge networks in cluster evolution by identifying the structural characteristics of networks. The structural characteristics cover the scope, strength, and closeness of the relationships among the network members as well as a quantitative scale. This approach will provide meaningful information in seeking cluster growth policies in terms of the formation and development of knowledge relations. |
| Keywords: | regional clusters; knowledge heterogeneity; cluster growth |
| JEL: | O32 O38 R58 |
| Date: | 2023–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kieter:2019_007&r=net |
| By: | Marczinek, Max; Maurer, Stephan; Rauch, Ferdinand |
| Abstract: | How do trade networks persist following disruptions of political networks? We study different types of persistence following the decline of the Hanseatic League using a panel of 21, 590 city-level trade flows over 190 years, covering 1, 425 cities. We use the Sound Toll data, a dataset collected by the Danish crown until 1857 that registered every ship entering or leaving the Baltic Sea, forming one of the most granular and extensive trade data sets. We measure trade flows by counting the number of ships sailing on a particular route in a given year and estimate gravity equations using PPML and an appropriate set of fixed effects. Bilateral gravity estimation results show that trade among former Hansa cities only shows persistence after its dissolution in 1669 for about 30 years, but this persistence is not robust across different regression specifications. However, when we incorporate the flag under which a ship is sailing and consider trilateral trade (where an observation is a combination of origin, destination, and flag), we find that trade persistently exceeds the gravity benchmark: Hansa cities continued to trade more with each other, but only on ships that were owned in another former Hansa city and thus sailed under a Hansa flag. Similar effects are found for trade among former Hansa cities and their trading posts abroad, yet again only conditional on the ship sailing under a former Hanseatic flag. Trade flows among the same pair of origin and destination cities, but under a different flag, do not show this persistence. Our main result shows that the identity of traders persists longer and more strongly than other forms of trading relationships we can measure. Apart from these new quantitative and qualitative insights on the persistence of trade flows, our paper is also of historic interest, as it provides new and detailed information on the speed of decline of trade amongst members of the Hanseatic League. |
| Keywords: | Hanseatic League; Hansa; gravity |
| JEL: | F14 N73 N93 |
| Date: | 2022–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117760&r=net |
| By: | Fernandes, Bernardo de Barros; Ferreira, Pedro Cavalcanti |
| Abstract: | We develop a multi-sector general equilibrium model, with intersectorial input–output linkages and CO2 emissions, to investigate the economic impacts of the implementation of a carbon taxation policy in an economy permeated by preexisting distorting taxes. The model is calibrated to Brazil and the carbon price is set so that the economy meets its annual global greenhouse gases emissions pledge for 2030 based on the Paris Agreement. In the presence of production networks, the initially concentrated tax shocks propagate throughout the economy, provoking widespread relative input price variations. Depending on the deforestation scenario, GDP losses range between 5.71% and 0.25%, the latter corresponding to the record low deforestation levels of 2012. Sectors are heterogeneously affected. As expected, those sectors more reliant on taxed pollutant resources (e.g., Energy and Transport) suffer sizable decreases in production. But a significant part of the impacts on sectorial production comes indirectly through network effects, even in the absence of new taxes levied on the sector’s product or its direct inputs. When Agriculture & Livestock are also taxed, GDP losses are considerably smaller. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:833&r=net |
| By: | Magnus A. H. Gulbrandsen |
| Abstract: | I estimate the effect of lottery winnings on peers' debt accumulation using administrative data from Norway. I identify neighbors of lottery winners, and estimate an average debt response of 2.1 percent of the lottery prize among households that live up to ten houses from the winner. Analyzing heterogeneity, I find that neighborhood characteristics and shared characteristics with the winner matter for the debt response: there is a tendency for greater effects for those (1) residing closest to the winner, (2) residing in single-household dwellings, (3) with a longer tenure, and (4) with a household structure similar to that of the winner. Finally, estimates of the (imputed) expenditure response among neighbors indicate that they accumulate debt to finance increased spending, consistent with a "keeping-up-with-the Joneses" type explanation, where neighbors react to each others expenditure. |
| Keywords: | peer effects, debt accumulation, income shocks, network homophily, household finance |
| JEL: | D14 D31 D91 E21 G51 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2021_10&r=net |
| By: | Delalibera, Bruno Ricardo; Ferreira, Pedro Cavalcanti; Gomes, Diego Braz Pereira; Soares, Johann Rodrigues de Souza |
| Abstract: | This paper investigates the effects of a tax reform that eliminates tax rate heterogeneity and cumulative taxation using a general equilibrium model that includes multiple sectors with market power. Industries are connected through input-output linkages, and changes in tax costs are not confined within industries. The tax reform shocks propagate through the production network, which may amplify or mitigate their results. We calibrate the model to Brazil, a country with a highly distorted tax system. The revenue-neutral tax reform generates gains of 7.8% of GDP and 1.9% of welfare. Just eliminating Value-Added Tax (VAT) rate dispersion leads to a 5.9% increase in GDP. As expected, sectors that were heavily taxed prior to the reform, as well as their suppliers, benefit the most. Yet, due to propagation effects, in 10 sectors direct taxes increased but output and profits did not fall. The reason is that their costs were reduced as a result of lower taxes on their suppliers and/or increased demand. Moreover, tax distortions were leading to a shorter and inefficient production chain as the reform significantly changed the linkage structure of the economy. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:832&r=net |
| By: | Tadao Hoshino; Takahide Yanagi |
| Abstract: | This study considers testing the specification of spillover effects in causal inference. We focus on experimental settings in which the treatment assignment mechanism is known to researchers and develop a new randomization test utilizing a hierarchical relationship between different exposures. Compared with existing approaches, our approach is essentially applicable to any null exposure specifications and produces powerful test statistics without a priori knowledge of the true interference structure. As empirical illustrations, we revisit two existing social network experiments: one on farmers' insurance adoption and the other on anti-conflict education programs. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.05580&r=net |
| By: | Ivan Soraperra; Joël van der Weele; Marie Claire 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); Shaul Shalvi |
| Abstract: | We experimentally study the social transmission of \inconvenient" information about the externalities generated by one's own decision. In the laboratory, we pair uninformed decision makers with informed senders. Compared to a setting where subjects can choose their information directly, we find that social interactions increase selfi sh decisions. On the supply side, senders suppress almost 30 percent of \inconvenient" information, driven by their own preferences for information and their beliefs about the decision maker's preferences. On the demand side, about one-third of decision makers avoids senders who transmit inconvenient information (\shooting the messenger"), which leads to assortative matching between information-suppressing senders and information-avoiding decision makers. Having more control over information generates opposing effects on behavior: sel sh decision makers remain ignorant more often and donate less, while altruistic decision makers seek out informative senders and give more. We discuss applications to information sharing in social networks and to organizational design. |
| Keywords: | Social interactions, Information avoidance, Assortative matching, Ethical behavior, experiment |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03899658&r=net |
| By: | Lorenzo Amir Nemati Fard; Michele Starnini; Michele Tizzoni |
| Abstract: | The course of an epidemic can be drastically altered by changes in human behavior. Incorporating the dynamics of individual decision-making during an outbreak represents a key challenge of epidemiology, faced by several modeling approaches siloed by different disciplines. Here, we propose an epi-economic model including adaptive, forward-looking behavioral response on a heterogeneous networked substrate, where individuals tune their social activity based on future health expectations. Under basic assumptions, we show that it is possible to derive an analytical expression of the optimal value of the social activity that matches the traditional assumptions of classic epidemic models. Through numerical simulations, we contrast the settings of global awareness -- individuals only know the prevalence of the disease in the population -- with local awareness, where individuals explicitly know which of their contacts are infected. We show that behavior change can flatten the epidemic curve by lowering the peak prevalence, but local awareness is much more effective in curbing the disease early with respect to global awareness. Our work bridges classical epidemic modeling with the epi-economic approach, and sheds light on the effects of heterogeneous behavioral responses in curbing the epidemic spread. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.04947&r=net |
| By: | Shuguang Jiang (Centre for Economic Research, Shandong University, Jinan, Shandong, 250100, China); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, 93 Chemin des Mouilles, F-69130, Ecully, France. IZA, Bonn, Germany) |
| Abstract: | We study cheating as a collective-risk social dilemma in a group setting in which individuals are asked to report their actual outcomes. Misreporting their outcomes increases the individual’s earnings but when the sum of claims in the group reaches a certain threshold, a risk of collective sanction affects all the group members, regardless of their individual behavior. Because of the pursuit of selfish interest and a lack of coordination with other group members, the vast majority of individuals eventually earn less than the reservation payoff from honest reporting in the group. Over time, most groups are trapped in a “Tragedy of Dishonesty", despite the presence of moral costs of lying. The risk of collective sanction is triggered less frequently in small groups than in large ones, while priming a collectivist mindset has little effect on lying. |
| Keywords: | Dishonesty, Public Bad, Group Size, Collectivism, Individualism, Experiment |
| JEL: | C92 D01 D91 D62 H41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2216&r=net |
| By: | Jordan Norris; Charles Johnson; Ilya Spitkovsky (Division of Social Science) |
| Abstract: | A core purpose of economic modeling is to conduct comparative static analyzes. Often one is interested in its qualitative features, such as if the e ect of a shock is positive or above one. Yet, except in highly-stylized models, the theoretically implied relationships are intractable, and empirically demanding, requiring complete identication of the model. We derive new bounds on comparative statics that are more tractable and feasible under partial identi cation. We require only that the Jacobian is diagonally dominant | intuitively, there is limited feedback in the model. We demonstrate application in two canonical models: a network game and a model of oligopoly competition. JEL Codes: C3, D85 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:nad:wpaper:20230082&r=net |