nep-net New Economics Papers
on Network Economics
Issue of 2023‒11‒06
seven papers chosen by
Alfonso Rosa García, Universidad de Murcia

  1. A Model of Online Misinformation with Endogenous Reputation By Lau, Andy
  2. Reconstructing supply networks By Lafond, François; Mungo, Luca; Brintrup, Alexandra; Garlaschelli, Diego
  3. Degree Centrality, von Neumann-Morgenstern Expected Utility and Externalities in Networks By Rene’ van den Brink; Agnieszka Rusinowska
  4. Non-Bank Financial Institutions and Banks’ Fire-Sale Vulnerabilities By Nicola Cetorelli; Mattia Landoni; Lina Lu
  5. Where Do Social Support and Epistemic Centrality Come From? The Case of Innovators in the French Biotech Industry By Alvaro Pina Stranger; Germán Varas; Valentin Gerard
  6. Towards a General Typology of Personal Network Structures By González-Casado, Miguel A.; Molina, Jose Luis; Sánchez, Angel
  7. Good Schools or Good Students?: Evidence on School Effects from Universal Random Assignment of Students to High Schools By Cristia, Julian P.; Bastos, Paulo; Beomsoo, Kim; Malamud, Ofer

  1. By: Lau, Andy (University of Warwick)
    Abstract: Misinformation dissemination in social media has emerged as a critical contemporary issue. This paper augments existing models of online misinformation by incorporating endogenous reputation dynamics. In contrast to prior research, reputation plays a pivotal role in shaping agents Bayesian-Nash equilibrium strategy through two key avenues : (i) the sharer’s reputation positively impacts the likelihood of sharing, and (ii) agents with higher initial reputations are less willing to share compared to their counterparts with lower initial reputations. Furthermore, this paper provides insights into the formation of individuals’ networks on social media. Surprisingly, individuals with high reputations are not universally favoured as network connections. Additionally, the paper examines relevant comparative statics, including the importance of interactions, and the implications of homophily. This research establishes a foundation for understanding the dynamics of reputation-based information sharing and network structure.
    Keywords: Information sharing ; misinformation ; reputation ; network ; social media JEL classifications: C72 ; D83 ; D85
    Date: 2023
  2. By: Lafond, François; Mungo, Luca; Brintrup, Alexandra; Garlaschelli, Diego
    Abstract: Network reconstruction is a well-developed sub-field of network science, but it has only recently been applied to production networks, where nodes are firms and edges represent customer-supplier relationships. We review the literature that has flourished to infer the topology of these networks by partial, aggregate, or indirect observation of the data. We discuss why this is an important endeavour, what needs to be reconstructed, what makes it different from other network reconstruction problems, and how different researchers have approached the problem. We conclude with a research agenda.
    Keywords: link prediction, supply networks
    Date: 2023–10
  3. By: Rene’ van den Brink (Vrije Universiteit Amsterdam); Agnieszka Rusinowska (University Paris 1 Pantheon-Sorbonne)
    Abstract: This paper aims to connect the social network literature on centrality measures with the economic literature on von Neumann-Morgenstern expected utility functions using cooperative game theory. The social network literature studies various concepts of network centrality, such as degree, betweenness, connectedness, and so on. This resulted in a great number of network centrality measures, each measuring centrality in a different way. In this paper, we aim to explore which centrality measures can be supported as von Neumann-Morgenstern expected utility functions, reflecting preferences over different network positions in different networks. Besides standard axioms on lotteries and preference relations, we consider neutrality to ordinary risk. We show that this leads to a class of centrality measures that is fully determined by the degrees (i.e. the numbers of neighbours) of the positions in a network. Although this allows for externalities, in the sense that the preferences of a position might depend on the way how other positions are connected, these externalities can be taken into account only by considering the degrees of the network positions. Besides bilateral networks, we extend our result to general cooperative TU-games to give a utility foundation of a class of TU-game solutions containing the Shapley value.
    Keywords: weighted network, degree, centrality measure, externalities, neutrality to ordinary risk, expected utility function
    JEL: D85 D81 C02
    Date: 2023–10–12
  4. By: Nicola Cetorelli; Mattia Landoni; Lina Lu
    Abstract: Banks carry significant exposures to nonbanks from direct dealings, but they can also be exposed, indirectly, through losses in asset values resulting from fire-sale events. We assess the vulnerability of U.S. banks to fire sales potentially originating from any of twelve separate non-bank segments and identify network-like externalities driven by the interconnectedness across non-bank types in terms of asset holdings. We document that such network externalities can contribute to very large multiples of an original fire sale, thus suggesting that conventional assessments of fire-sale vulnerabilities can be grossly understated and highlighting the value of treating non-bank financial institutions as one organic whole for monitoring purposes.
    Keywords: fire sales; network externalities; financial stability; nonbanks; monitoring
    JEL: G21 G23
    Date: 2023–03–03
  5. By: Alvaro Pina Stranger (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Germán Varas (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Valentin Gerard (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The link between entrepreneur's network centrality and innovation performance has been broadly studied in knowledge-intensive industries such as biotechnology. However, little research has been focused on the social mechanisms that allow innovators to reach such a central position. We contribute to the existing literature by exploring the factors that may lead or prevent entrepreneurs from reaching a central position in their professional networks of knowledge exchange and social support in French biotech milieu. We use a unique quantitative and qualitative database of 138 and 126 biotech entrepreneurs observed, respectively, in 2008 and 2013. When accounting for entrepreneurs' position in the social (friendship) and knowledge (advice) domain, we draw on three dimensions through which entrepreneurs build their position: their professional experience, their inter-organizational (or political) engagement, and the financial and geographical situation of their company. Results from a regression analysis showed that the specific individual and organizational aspects of the trajectory of the entrepreneurs explain their position in the observed networks. Factors such as the previous experience in the health industry, the training expertise, the international experience, the political engagement, and the geographical and financial situation of the company help entrepreneurs to build up their centrality. The two observations allow us to describe indirectly the evolution of norms that are considered legitimated to carry out innovation in the biotech field.
    Keywords: centrality, biotechnology industry, advice network, friendship network, entrepreneurs, innovation
    Date: 2023
  6. By: González-Casado, Miguel A.; Molina, Jose Luis; Sánchez, Angel
    Abstract: In this study, we aim to uncover the fundamental dimensions of structural variability in Personal Networks (PNs) and develop a classification solely based on these structural properties. We address the limitations of previous literature and lay the foundation for a rigorous methodology to develop a robust, unbiased Structural Typology of PNs. We find a way to effectively describe the structural variability of PNs in terms of six basic dimensions encompassing community and cohesive subgroup structure, as well as levels of cohesion, hierarchy, and centralization. Furthermore, we categorize PNs into eight types, and interpret them structurally. We assess the robustness and generality of our typology. To encourage its adoption and support future research, we provide a publicly available Python class, enabling researchers to utilize our methodology and test the universality of the proposed typology.
    Date: 2023–10–10
  7. By: Cristia, Julian P.; Bastos, Paulo; Beomsoo, Kim; Malamud, Ofer
    Abstract: How much do schools differ in their effectiveness? Recent studies that seek to answer this question account for student sorting using random assignment generated by central allocation mechanisms or oversubscribed schools. However, the resulting estimates, while causal, may also reflect peer effects due to differences in peer quality of non-randomized students. We exploit universal random assignment of students to high schools in certain areas of South Korea to provide estimates of school effects that may better reflect the effects of school practices. We find significant effects of schools on scores in high-stakes college entrance exams: a 1 standard deviation increase in school quality leads to 0.06-0.08 standard deviations higher average academic achievement in Korean and English languages. Analogous estimates from areas of South Korea that do not use random assignment, and therefore include the effects of student sorting and peer effects, are substantially higher.
    Keywords: School effects;Universal random assignment;Peer effects;School inputs
    JEL: I21 J24
    Date: 2022–07

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