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on Network Economics |
| By: | Gergely Horvath |
| Abstract: | We experimentally study effort provision and network formation in the linear-quadratic game characterized by positive externality and complementarity of effort choices among network neighbors. We compare experimental outcomes to the equilibrium and efficient allocations and study the impact of group size and linking costs. We find that individuals overprovide effort relative to the equilibrium level on the network they form. However, their payoffs are lower than the equilibrium payoffs because they create fewer links than it is optimal which limits the beneficial spillovers of effort provision. Reducing the linking costs does not significantly increase the connectedness of the network and the welfare loss is higher in larger groups. Individuals connect to the highest effort providers in the group and ignore links to relative low effort providers, even if those links would be beneficial to form. This effect explains the lack of links in the network. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.05913&r=net |
| By: | Giuseppe Calafiore; Giulia Fracastoro; Anton Proskurnikov |
| Abstract: | In this paper we analyze the resilience of a network of banks to joint price fluctuations of the external assets in which they have shared exposures, and evaluate the worst-case effects of the possible default contagion. Indeed, when the prices of certain external assets either decrease or increase, all banks exposed to them experience varying degrees of simultaneous shocks to their balance sheets. These coordinated and structured shocks have the potential to exacerbate the likelihood of defaults. In this context, we introduce first a concept of {default resilience margin}, $\epsilon^*$, i.e., the maximum amplitude of asset prices fluctuations that the network can tolerate without generating defaults. Such threshold value is computed by considering two different measures of price fluctuations, one based on the maximum individual variation of each asset, and the other based on the sum of all the asset's absolute variations. For any price perturbation having amplitude no larger than $\epsilon^*$, the network absorbs the shocks remaining default free. When the perturbation amplitude goes beyond $\epsilon^*$, however, defaults may occur. In this case we find the worst-case systemic loss, that is, the total unpaid debt under the most severe price variation of given magnitude. Computation of both the threshold level $\epsilon^*$ and of the worst-case loss and of a corresponding worst-case asset price scenario, amounts to solving suitable linear programming problems.} |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.10631&r=net |
| By: | Ketelaars, Martijn (Tilburg University, Center For Economic Research) |
| Keywords: | composition down, ; composition up; claims rules; allocation rules; transfer rules |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:041e8388-cc78-4d6b-b6ba-5c043157537b&r=net |
| By: | Geoff Boeing; Jaehyun Ha |
| Abstract: | Street networks allow people and goods to move through cities, but they are vulnerable to disasters like floods, earthquakes, and terrorist attacks. Well-planned network design can make a city more resilient and robust to such disruptions, but we still know little about worldwide patterns of vulnerability, or worldwide empirical relationships between specific design characteristics and resilience. This study quantifies and measures the vulnerability of the street networks of every urban area in the world then models the relationships between vulnerability and street network design characteristics. To do so, we simulate over 2.4 billion trips across more than 8, 000 urban areas in 178 countries, while also simulating network disruption events representing floods, earthquakes, and targeted attacks. We find that disrupting high-centrality nodes severely impacts network function. All else equal, networks with higher connectivity, fewer chokepoints, or less circuity are less vulnerable to disruption's impacts. This study thus contributes a new global understanding of network design and vulnerability to the literature. We argue that these design characteristics offer high leverage points for street network resilience and robustness that planners should emphasize when designing or retrofitting urban networks. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.10636&r=net |
| By: | van Lent, Max (Leiden University) |
| Abstract: | This paper studies the relationship between the creative abilities of study peers and academic achievement. We conduct a novel large scale field experiment at university, where students are randomized into work groups based on their score on a creativity test prior to university entry. We first show that the creative abilities of peers matter for a student's academic achievement. A one standard deviation higher creativity peer group improves study performance by 8.4 to 10 percentage points. Notably, this effect is driven by the average group creativity, there is no special impact of creative superstars. Further analysis suggests that students exposed to creative peers become more creative, but do not adjust their overall study effort. This is in line with the idea that creative approaches and questions of peers help students to master the study material better. Overall, our study highlights the importance of peer effects of creative students in shaping academic outcomes. |
| Keywords: | peer effects, academic achievement, creativity, field experiment |
| JEL: | I21 I24 J24 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16847&r=net |
| By: | Essbaumer, Elisabeth |
| Abstract: | This paper analyzes peer effects at the University of St. Gallen (HSG) in Switzerland. The identification strategy relies on randomized student groups to investigate how graduates’ outcomes are affected by the social composition of their peer groups. The results indicate that a 10 percentage points higher share of peers with low socio-economic status (SES) leads to a 5.08% increase in graduates’ income one year after graduation. The effect is strongest on other low-SES students and functions through an adoption of job searching behavior, occupational choices and labor supply. I do not find evidence in this sample that the outcomes of low-SES students are negatively affected by high-SES peer exposure. |
| Keywords: | peer effects, social mobility, human capital, educational mobility |
| JEL: | D64 J62 I24 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2024:01&r=net |
| By: | Emanuele Bacchiocchi; Andrea Bastianin; Graziano Moramarco |
| Abstract: | We estimate the short-run effects of severe weather shocks on local economic activity and assess cross-border spillovers operating through economic linkages between U.S. states. We measure weather shocks using a detailed county-level database on emergency declarations triggered by natural disasters and estimate their impacts with a monthly Global Vector Autoregressive (GVAR) model for the U.S. states. Impulse responses highlight significant country-wide macroeconomic effects of weather shocks hitting individual regions. We also show that (i) taking into account economic interconnections between states allows capturing much stronger spillover effects than those associated with mere spatial adjacency, (ii) geographical heterogeneity is critical for assessing country-wide effects of weather shocks, and (iii) network effects amplify the local impacts of these shocks. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.10907&r=net |