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on Network Economics |
| By: | Francis Bloch; Bhaskar Dutta; Marcin Dziubi\'nski |
| Abstract: | A planner wants to select one agent out of n agents on the basis of a binary characteristic that is commonly known to all agents but is not observed by the planner. Any pair of agents can either be friends or enemies or impartials of each other. An individual's most preferred outcome is that she be selected. If she is not selected, then she would prefer that a friend be selected, and if neither she herself or a friend is selected, then she would prefer that an impartial agent be selected. Finally, her least preferred outcome is that an enemy be selected. The planner wants to design a dominant strategy incentive compatible mechanism in order to be able choose a desirable agent. We derive sufficient conditions for existence of efficient and DSIC mechanisms when the planner knows the bilateral relationships between agents. We also show that if the planner does not know these relationships, then there is no efficient and DSIC mechanism and we compare the relative efficiency of two ``second-best'' DSIC mechanisms. Finally, we obtain sharp characterization results when the network of friends and enemies satisfies structural balance. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.11157 |
| By: | Witte, Marc J. (Vrije Universiteit Amsterdam) |
| Abstract: | What motivates workers’ referral decisions? Combining a field experiment in a firm and urban social network data, I first show that workers primarily refer those who previously referred them. This reciprocity leads to significant on-the-job productivity losses and excludes less connected individuals. Incentivized referrals reduce reciprocity and make workers screen more productive colleagues. Second, peripheral workers use referrals strategically to establish new and reciprocated links which persist after 18 months. These results are consistent with a network-based referral model where individuals trade off pecuniary and social incentives. The findings suggest that referrals through social networks can reinforce labor market inequalities. |
| Keywords: | field experiment, social networks, job referrals |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18258 |
| By: | Hiroyuki Asai (Graduate School of Economics, The University of Tokyo,); Makoto Nirei (Graduate School of Economics, The University of Tokyo,) |
| Abstract: | The friend-of-a-friend effect is the idea that when two firms share a common trading partner, a new link between them is likely to form. We quantify this effect in production networks, where the shared partner acts as relational capital facilitating new connections. First, we develop a general equilibrium (GE) model that endogenizes firms’ link formation and incorporates the friend-of-a-friend mechanism. We show that the GE model simplifies to a dyad-level logit specification, enabling us to estimate the friend-of-a-friend effect using a quadruple-based conditional logit that controls for buyer and supplier fixed effects. Analyzing a dynamic panel of Japanese firm-to-firm transactions provides strong evidence of the friend-of-a-friend effect, with a magnitude comparable to other important factors like physical distance and sectoral proximity. Finally, we evaluate the macroeconomic impact through a counterfactual analysis within a calibrated GE model. Results indicate that removing the friend-of-a-friend effect decreases welfare by 0.6% and changes the propagation of firm-level shocks by altering the network structure. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cfi:fseres:cf608 |
| By: | Argyrios Deligkas; Gregory Gutin; Mark Jones; Philip R. Neary; Anders Yeo |
| Abstract: | In a public goods game, every player chooses whether or not to buy a good that all neighboring players will have access to. We consider a setting in which the good is indivisible, neighboring players are out-neighbors in a directed graph, and there is a capacity constraint on their number, k, that can benefit from the good. This means that each player makes a two-pronged decision: decide whether or not to buy and, conditional on buying, choose which k out-neighbors to share access. We examine both pure and mixed Nash equilibria in the model from the perspective of existence, computation, and efficiency. We perform a comprehensive study for these three dimensions with respect to both sharing capacity (k) and the network structure (the underlying directed graph), and establish sharp complexity dichotomies for each. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.11475 |
| By: | Roudari, Soheil |
| Abstract: | Examining the spillover effects between exchange rates, stock market index, housing prices and inflation is one of the key issues in macroeconomics. This topic is particularly important in relation to Iran, which has been affected by various international sanctions for many years and has restricted the role of oil exports in the economy. Because the application of international sanctions can have a significant effect on the relationship between indicators as well as their impact and effectiveness on the investigated network, we study the effects of the dynamic spillover between the above four indices by using a TVP-VAR model that is based on Diebold and Yilmaz (2012). We have also focused on three time periods: the whole period (March 2006-January 2022), the first period of sanctions (June 2010-July 2015) and the second period of sanctions (May 2018-January 2022). The results show that in all three periods, inflation rate is the most influential indicator in the network. But these results are different in relation to the percentage of influence of these four indicators on the entire network. In the entire period and in the first period of sanctions, exchange rate volatilities have been the main channel of transmitting shocks to the network. However, in the second period of sanctions the main transmitter is inflation. According to the results, the increase in the exchange rate (devaluation of riyal) has been the most important key factor in creating destructive fluctuations in Iran’s economy, which ripples through the entire economy, affecting the stock market index, inflation rate, and housing prices. |
| Keywords: | Stock Market, Inflation, Housing, Exchange Rate, Sanction, TVP-VAR Model |
| JEL: | E31 F5 G01 |
| Date: | 2024–04–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126829 |
| By: | Patrick M. Kline |
| Abstract: | Economists often rely on estimates of linear fixed effects models developed by other teams of researchers. Assessing the uncertainty in these estimates can be challenging. I propose a form of sample splitting for network data that breaks two-way fixed effects estimates into statistically independent branches, each of which provides an unbiased estimate of the parameters of interest. These branches facilitate uncertainty quantification, moment estimation, and shrinkage. Algorithms are developed for efficiently extracting branches from large datasets. I illustrate these techniques using a benchmark dataset from Veneto, Italy that has been widely used to study firm wage effects. |
| JEL: | C01 J30 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34486 |