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on Network Economics |
| By: | Paolo Pin |
| Abstract: | This paper studies how the possibility of strategic misreporting shapes endogenous communication networks. Agents observe noisy private signals about a common state, form costly communication links, exchange private messages with their neighbors, and then choose actions. Payoffs reward both accuracy and coordination with linked agents. A link is valuable because it gives access to information, but it is useful only if the induced local information structure makes truthful transmission incentive compatible. We show that clique components support truthful communication: within a clique, all members observe the same profile of local signals, choose the same posterior action, and therefore have no incentive to distort reports. With heterogeneous signal precisions and convex linking costs, the core selects assortative information clubs ordered by signal precision. These stable truthful networks need not be socially efficient. Because the informational value of precision is decreasing, concentrating high-precision agents in the same club may be privately stable but socially dominated by more mixed partitions. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.02776 |
| By: | Alex Hayes; Keith Levin |
| Abstract: | Peer effect estimation requires precise network measurement, yet most empirical networks are noisy, rendering standard estimators inconsistent. To address measurement error in networks, we propose a method to estimate peer effects in networks whose expected adjacency matrix is low-rank. Our key result shows that peer effects over a true unobserved network are asymptotically equivalent to peer effects over the expected adjacency matrix. This result reduces peer effect estimation in noisy networks to low-rank matrix estimation targeting the expected adjacency matrix. We develop our theory for weighted networks observed with additive noise, but simulations suggest approach can be applied more generally when there is a low-rank estimation method suited to a particular noise structure. We demonstrate via simulations that our approach applies to egocentric samples, aggregated relational data, and networks with missing edges, each requiring a different low-rank estimation method. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.03204 |
| By: | Chang, Jinyuan; Fang, Qin; Kolaczyk, Eric D.; MacDonald, Peter W.; Yao, Qiwei |
| Abstract: | We propose an autoregressive framework for modelling dynamic networks with dependent edges. It encompasses models that accommodate, for example, transitivity, degree heterogenenity, and other stylized features often observed in real network data. By assuming the edges of networks at each time are independent conditionally on their lagged values, the models, which exhibit a close connection with temporal exponential random graph models, facilitate both simulation and the maximum likelihood estimation (MLE) in a straightforward manner. Due to the possibly large number of parameters in the models, the natural MLEs may suffer from slow convergence rates. An improved estimator for each component parameter is proposed based on an iteration employing projection, which mitigates the impact of the other parameters. Leveraging a martingale difference structure, the asymptotic distribution of the improved estimator is derived without the assumption of stationarity. The limiting distribution is not normal in general, although it reduces to normal when the underlying process satisfies some mixing conditions. Illustration with a transitivity model was carried out in both simulation and a real network data set. |
| Keywords: | conditional independence; dynamic networks; maximum likelihood estimation; stylized features of network data; transitivity |
| JEL: | C1 |
| Date: | 2026–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137708 |
| By: | Hugo De Vere; Matthew McCormick |
| Abstract: | Understanding the underlying network structure of money markets provides valuable insights for monitoring reserve scarcity and its evolution in response to regulatory and market changes. |
| Keywords: | banks; liquidity; money markets |
| Date: | 2025–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:101902 |
| By: | Sánchez Serrano, Antonio |
| Abstract: | Using who-to-whom data for the last quarter of 2024, I build networks of financial interconnections in the euro area countries. After representing them in chord diagrams, I consider centrality metrics and find that banks dominate, with four exceptions: Cyprus, Ireland, Luxembourg and Malta. In these countries, other financial institutions and investment funds are at the core, with limited links to domestic sectors and strong ones with the rest of the world. A comparison across countries reveals substantial homogeneity between networks in the sixteen euro area countries and large differences with Cyprus, Ireland, Luxembourg and Malta. For each country, two communities are identified, one focused on the real economy and including banks, and the second comprising other financial intermediaries and the rest of the world. The consistent mapping of sectoral linkages and the accompanying descriptive analysis can be useful for policymakers and may also serve as platform for further analytical work. JEL Classification: D85, G10, G20, G51 |
| Keywords: | centrality, contagion, financial interlinkages, flow of funds |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263223 |
| By: | Christine Docherty; Alessio Saretto |
| Abstract: | Reciprocal deposit networks are designed to increase the total amount eligible for FDIC deposit insurance. In recent years, growth of the networks has accelerated, prompting a re-evaluation of the existing deposit insurance framework and raising at least three questions. |
| Keywords: | banking; consumer finance; deposits; deposit insurance |
| Date: | 2025–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:101403 |
| By: | Diego Vallarino |
| Abstract: | This paper develops a Hall-Sandpile model of economic instability that combines a Hall-like transversal stress mechanism with sandpile threshold dynamics on a real production-network substrate. In analogy with the physical Hall effect, where exposed flows under an external field generate stress in a transversal direction, we model economic shocks as fields that act on flow-intensive, low-redundancy, low-capacity nodes and produce systemic stress through a multiplicative conversion function. The accumulated stress drives a discrete toppling rule and an avalanche dynamics whose effective activation threshold declines with transversal exposure. The model is calibrated on annual World Input--Output Database (WIOD) production networks for 2000--2014 and simulated on the 2014 substrate (2{, }283 country--sector nodes) under three alternative propagation normalisations to avoid mechanical near-criticality from row-stochastic operators. Controlled Monte Carlo experiments over external field intensity and redundancy stress generate four ordered regimes: stable absorption, latent fragility, critical transition, and avalanche regime. Mean avalanche size and the probabilities of finite-size systemic events $\Pr(S\!\geq\!5)$, $\Pr(S\!\geq\!10)$ and $\Pr(S\!\geq\!20)$ rise jointly with field intensity and redundancy stress. Tail diagnostics show regime-dependent thickening of the avalanche distribution, but the estimated tail indices remain too high to interpret as evidence of universal power-law criticality. The contribution is therefore a finite-size, real-network description of how transversal stress activates structural fragility, not a claim of self-organised criticality in the global economy. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.01561 |
| By: | Nynke de Groot; Bas van der Klaauw |
| Abstract: | Active labor market programs targeted at older unemployed workers are often believed to be ineffective. We exploit a large-scale randomized experiment involving approximately 50, 000 older unemployed workers to evaluate an intensive job search assistance program that focuses on exploiting the social network. Participation in the program increases exits from unemployment insurance by 4.4 percentage points. Program participation reduces cumulative benefit payments by about €715, exceeding the program costs of €470. Participants compensate the reduced benefits receipt with higher earnings. We find that participants change their job search behavior according to the content of the program, and that both the trainer and the training group composition affect the program effectiveness. |
| Keywords: | Randomized experiment, older unemployed workers, ALMP, job search assistance, social network |
| JEL: | C93 J14 J64 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26132 |
| By: | Paolo Pin; Roberto Rozzi |
| Abstract: | We study the emergence of conformity preferences in an environment in which agents choose effort under heterogeneous, possibly misspecified returns, and social interactions do not directly affect material payoffs. Some agents choose effort by trading off performance and conformity to expected peer behavior. We characterize subjective best responses. For any given beliefs, an optimal and unique level of peer pressure exists and is evolutionarily stable within groups of agents sharing the same misspecification. Such a level is zero for correctly specified agents and may be positive for misspecified ones. When the efficient level of peer pressure is interior, misspecified agents choose effort equal to their true return, resulting in an equilibrium behavior that is both self-confirming and Nash, allowing the persistence of misspecifications. Peer pressure need not generate long-run allocative distortions, but it creates a perceived value of social information. In equilibrium, this value depends only on misspecification, generating scope for informational rents. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.02756 |
| By: | Kanato Nakakuni; Michèle Tertilt; Minchul Yum |
| Abstract: | This chapter examines how social norms shape fer lity behavior. We first present cross-country evidence linking fer lity to norms regarding family size, childcare, gender roles, paren ng, and sexual behavior. We also review empirical studies showing substan al fer lity spillovers within families, workplaces, and social networks. To interpret these pa erns, we present a series of models to clarify the mechanisms through which norms and fer lity decisions interact. We organize the theories by type of norm: norms about ideal family size, norms governing the use of market childcare, gender norms within the household, paren ng norms related to educa onal investment and social comparison, and norms surrounding birth control. We discuss how changes in social norms over me may have contributed to fer lity decline. Finally, we highlight promising direc ons for future research. |
| Keywords: | Fertility, Social Norms, Externality, Pro-natal Policies |
| JEL: | D1 D62 I28 J13 N3 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_747 |
| By: | Chaim Fershtman (Tel Aviv University); Uzi Segal (Boston College) |
| Abstract: | We analyze societies where people express their opinions with respect to a single issue. These opinions also affect social connections. People enjoy being connected to others, but only with those whose opinions they deem acceptable. In such environments people behave strategically to optimize their social connections and therefore their expressed opinions do not necessarily represent their true ones. Dis- tributions of expressed opinions thus depend on the social structure. Changes in the views of some people or changes in the relative size of different groups may trigger changes in the map of social connections and in the distribution of expressed opinions. |
| Keywords: | Strategic opinion expression, social connections |
| JEL: | Z13 D85 |
| Date: | 2026–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:boc:bocoec:1111 |
| By: | Liang, Yuqi; Meyerhoff-Liang, Jan |
| Abstract: | Innovation research frequently relies on patent data to study technological change, yet empirical coverage of cities in the Global South remains limited. Sequence analysis has gained increasing attention as a method for analysing categorical trajectories in social sciences, but its application to regional innovation studies is constrained by the lack of sequence-ready urban datasets. Moreover, integration of sequence analysis with network analysis is underexplored, despite its potential to jointly capture relational structures and trajectory patterns in innovation processes. This paper introduces a database of sequential patent data for the innovation trajectories of 4, 125 Global South cities. Derived from existing geocoded patent data, the database includes general and technology-specific datasets (computing, environmental technology, and medicine), each available in sequence, network, sequence–network, and panel formats. Spanning from 1980 to 2014 and covering cities from seven countries (Brazil, Chile, China, India, Mexico, South Africa, and Turkey), the database supports analyses of innovation dynamics and helps increase the representation of Global South cities in economic geography, development studies and innovation research. |
| Date: | 2026–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:9w3ec_v1 |