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on Network Economics |
| By: | Gary Charness (University of California); Francesco Feri (Royal Holloway University of London); Matthew O. Jackson (Stanford University & Santa Fe Institute); Miguel A. Meléndez-Jiménez (Universidad de Málaga); Matthias Sutter (Max Planck Institute for Behavioral Economics, University of Cologne & University of Innsbruck) |
| Abstract: | We provide a first causal analysis of the behavioral consequences of the friendship paradox—the fact that people’s friends in a network have more connections than average. We find that people’s behavior is biased by their network position: they do not best respond to what they should infer the average behavior of the population to be, but instead simply to the average behavior of their friends. Moreover, we find that they fail to learn to overcome such a bias when relocated within the network, varying their observational environment. In these games of complements, the friendship paradox generates a systematic upward distortion in actions, increases behavioral dispersion, and persists despite learning opportunities. |
| Keywords: | Friendship paradox, networks, learning, experiment |
| JEL: | C91 D01 D85 D90 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:426 |
| By: | Weihua An; Pablo Estrada; Juan Estrada; David Jacho-Chavez |
| Abstract: | This paper proposes a model-based empirical method to identify influential individuals in risky behaviors. To determine the most influential individuals, we estimate peer influence using observational cross-sectional data from multiple social connections. Our empirical strategy employs the observed characteristics of distant individuals across multiple social networks as instruments to address the endogeneity arising from homophily. Using Add Health data, we find positive peer effects from friends and classmates on both cigarette smoking and marijuana use. Based on the estimated peer effects, we characterize the influencers in our sample. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.01415 |
| By: | Zoltan Elekes; Sandor Juhasz; Gergely Magyar; Balazs Lengyel; Gergo Toth |
| Abstract: | Regional industry clusters enhance firm performance, yet the geography of firm-to-firm transactions underlying this advantage remains unclear. Using nationwide supplier-buyer and labour-flow networks constructed from Hungarian administrative data, we examine how the spatial reach of cluster and non-cluster firms’ supplier, customer, and labour connections relates to firm performance. We find that greater geographic reach in both networks is associated with better firm performance. Among cluster firms, better-performing firms reach more distant customers while drawing from more geographically proximate labour markets. Our findings reveal that the spatial structure of inter-firm networks is a key source of the cluster premium. |
| Keywords: | supply chains, production networks, labour flows, regional clusters, firm performance |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2613 |
| By: | Shinpei Noguchi; Hiroto Sato; Konan Shimizu |
| Abstract: | This paper studies how network structures affect the efficiency of information aggregation in social learning environments. We consider a model in which rational agents sequentially choose actions based on private signals and observations of their neighbors' actions in a network. Focusing on comparisons of expected payoffs at a given finite period, we show that there exists an information structure under which the star network achieves a strictly higher expected payoff than any other network, and another information structure under which the complete network achieves a strictly higher expected payoff than any other network. Taken together, these results imply that no network is uniformly optimal across all information structures. Our analysis highlights a trade-off between the responsiveness effect and the overturning effect: disconnected networks preserve responsiveness of actions to private signals, whereas highly connected networks facilitate the aggregation of extreme information that overturns public beliefs. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.28921 |
| By: | Richards, Timothy J.; Rabinovich, Elliot |
| Abstract: | Food supply networks consist of complex, intertwined relationships among firms that depend on each other for flows of goods and services. Importantly, the stability of these relationships determines how resilience the entire network can expect to be through disruptions that may interrupt the normal flow of goods and services. We estimate the importance of endogenous network relationships to the resilience of an important food supply chain– bananas. We find that bargaining power is critically important to the endogneous formation of supply relationships, but network ties are not nearly as fragile as models of supply chain resilience in the macroeconomics literature suggest. |
| Keywords: | Industrial Organization |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404628 |
| By: | Jason Roderick Donaldson; Giorgia Piacentino; Xiaobo Yu |
| Abstract: | We develop a model of interbank networks with random liquidity shocks. Networks of dilutable debt---e.g., long-term, unsecured---facilitate efficient liquidity transfers: Shocked banks pledge interbank claims as collateral for new senior debt, diluting existing debt. Unlike with non-dilutable debt, indebtedness and connectedness are sources of stability, not fragility. Dilution is thus a ``backdoor bail-in'' that reallocates losses absent a resolution authority, trigger security, or ex post renegotiation. We uncover a class of networks, ``exponential networks, '' that implement optimal contingent transfers via plain debt. Yet exponential networks are not pairwise stable, whereas some core--periphery networks are, rationalizing observed interbank structures and their under-insurance against crises. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.13979 |
| By: | Carolin Nast; Tom Broekel |
| Abstract: | This study examines researchers’ diversification into sustainability research, distinguishing between initial entry and subsequent engagement intensity. While the existing literature emphasises individual-level drivers, we argue that such diversification is also shaped by organisational and relational contexts. Using bibliometric data from the University of Stavanger, Norway, we show that network distance to sustainability-active colleagues is a key predictor: researchers who are structurally closer to engaged peers are more likely to enter the field and deepen their involvement. By contrast, department- and faculty-level sustainability activities show weaker, more context-dependent associations, with department-level effects disappearing once network variables are included. The findings highlight the importance of intra-organisational knowledge networks for sustainability-oriented research transitions. |
| Keywords: | research diversification, sustainability research, organizational context, academic peer influence |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2618 |
| By: | Paul Ho (School of Economics, Singapore Management University); Daniel Lashkari (Federal Reserve Bank of New York); Pierre-Daniel Sarte (Federal Reserval Bank of Richmond) |
| Abstract: | A production sector’s size, as measured by its Domar weight, captures the contemporaneous aggregate effect of its productivity shocks. Any future aggregate effects, however, depend on that sector’s participation in the investment network. We derive a dynamic generalization of Hulten’s theorem in an environment with intermediate-input and investment networks. This generalization, implied by production efficiency alone, decomposes each sector’s Domar weight into an impact and a propagation component. The relative size of these components then determines how persistent the aggregate effects of sectoral shocks are, but cannot be known absent information on the economy’s production structure. We show in a tractable structural model that future GDP responses to sectoral shocks can also be described as weighted sums of all sectors’ Domar weights, with weights primarily dictated by these sectors’ network positions and capital shares. Quantifying the model with U.S. production data, we find that i) Domar weights become progressively less informative about the aggregate effects of sectoral shocks as the horizon lengthens and ii) over a three-year horizon, goods-producing sectors have larger cumulative aggregate effects than service-producing sectors, despite goods only accounting for less than one-third of GDP. Model-free local projections of U.S. GDP growth on sectoral TFP growth confirm these findings. |
| Keywords: | sectoral shocks; production networks; investment linkages; dynamic propagation |
| JEL: | E22 E23 E32 O41 C67 |
| Date: | 2026–07–06 |
| URL: | https://d.repec.org/n?u=RePEc:ris:smuesw:023537 |
| By: | Zihan Zhao |
| Abstract: | This paper studies how robust social learning is when sampling is selective, i.e., some types of actions are more likely to be sampled by successors. We show that Bayesian agents can achieve asymptotic learning despite non-expanding observations, because the endogenous observation network itself carries information and agents have ways to undo the selection bias. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.16599 |
| By: | Giroud, Xavier; Liu, Ernest; Mueller, Holger |
| Abstract: | The vast majority of U.S. inventors work for firms that also have inventors and plants in other tech clusters. Using merged USPTO–U.S. Census Bureau plant-level data, we show that larger tech clusters not only make local inventors more productive but also raise the productivity of inventors and plants in other clusters, which are connected to the focal cluster through their parent firms' networks of innovating plants. Cross-cluster innovation spillovers do not depend on the physical distance between clusters, and plants cite disproportionately more patents from other firms in connected clusters, across large physical distances. To rationalize these findings, and to inform policy, we develop a tractable model of spatial innovation that features both within- and cross-cluster innovation spillovers. Based on our model, we derive a sufficient statistic for the wedge between the social and private returns to innovation in a given location. Taking the model to the data, we rank all U.S. tech clusters according to this wedge. While larger tech clusters exhibit a greater social-private innovation wedge, this is not because of local knowledge spillovers, but because they are well-connected to other clusters through firms' networks of innovating plants. In counterfactual exercises, we show that an increase in the interconnectedness of U.S. tech clusters raises the social-private innovation wedge in (almost) all locations, but especially in tech clusters that are large and well-connected to other clusters. |
| Keywords: | Innovation |
| JEL: | O31 R30 G30 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19206 |
| By: | Pomberger, Nils; Köppl-Turyna, Monika |
| Abstract: | This paper examines how European venture capitalists connect at the partner level and whether observed ties reflect embeddedness and structural-similarity as predicted by network theory. Using PitchBook data on roughly 41, 000 completed European VC deals and approximately 4, 000 European-based VC partners, we reconstruct a large person-to-person network from fund-team affiliations, board co-involvement, and portfolio-executive links. The analysis uses network centrality measures, maximal clique participation, local neighborhood overlap, and Monte Carlo SimRank. The empirical design tests two baseline propositions. First, if cohesive participation captures embeddedness and eigenvector centrality captures influence, more embedded actors should be more central. Second, if ties form among structurally proximate actors, connected dyads should exhibit greater similarity than unconnected dyads. The results support both propositions. Clique participation is moderately positively associated with eigenvector centrality. Observed ties also exhibit substantially higher mean Jaccard similarity than randomly sampled non-ties, and the same pattern holds for Monte Carlo SimRank. |
| Abstract: | Venture Capital spielt eine zentrale Rolle bei der Finanzierung innovativer Unternehmen. Neben Kapital sind dabei vor allem Netzwerke von Bedeutung. Investor:innen tauschen Informationen aus, identifizieren Geschäftsmöglichkeiten, begleiten Unternehmen strategisch und organisieren Folgefinanzierungen. Ein neues Research Paper von Monika Köppl-Turyna und Nils Pomberger untersucht erstmals, wie stark europäische Venture-Capital-Investoren auf Partnerebene miteinander vernetzt sind und welche Strukturen diese Netzwerke prägen. Die Studie basiert auf Daten von rund 41.000 Venture-Capital-Transaktionen in Europa sowie Informationen zu rund 4.000 in Europa tätigen Venture-Capital-Partnern. Auf Basis von Fondszugehörigkeiten, gemeinsamen Mandaten und Verbindungen zu Portfoliounternehmen wird ein umfangreiches Netzwerk rekonstruiert, das mehr als 154.000 Akteure und rund 255.000 Beziehungen umfasst. Die Ergebnisse machen deutlich, dass europäische Venture-Capital-Netzwerke keineswegs zufällig entstehen. Vielmehr bilden sich enge Gruppen von Investoren, die über wiederholte Interaktionen, gemeinsame Beteiligungen und ähnliche berufliche Umfelder miteinander verbunden sind. Investoren, die stärker in solche Netzwerke eingebunden sind, nehmen zugleich häufig zentrale und einflussreiche Positionen innerhalb des europäischen Venture-Capital-Ökosystems ein. Darüber hinaus zeigt die Analyse, dass bestehende Verbindungen besonders häufig zwischen Akteuren entstehen, die bereits ähnliche Netzwerke und Kontaktstrukturen aufweisen. Vertrauen, Reputation und Informationsaustausch spielen damit eine wichtige Rolle für die Entstehung und Stabilität von Beziehungen im Venture-Capital-Markt. Das Research Paper liefert damit neue Einblicke in die Funktionsweise des europäischen Venture-Capital-Marktes und zeigt, dass Netzwerke nicht nur die Zusammenarbeit zwischen Investoren prägen, sondern potenziell auch Einfluss auf die Finanzierung, Entwicklung und den Erfolg innovativer Unternehmen haben. Gleichzeitig schafft die Analyse eine Grundlage für zukünftige Forschung zu den Auswirkungen von Investoren-Netzwerken auf Unternehmenswachstum, Anschlussfinanzierungen und Exits. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ecoarp:342527 |
| By: | Bahaj, Saleem; Della Corte, Pasquale; Massacci, Daniele; Seyde, Eduard |
| Abstract: | This paper studies how cross-border financial connections affect the response of exchange rates to trade shocks. Theoretically, we develop a multi-country model whereby a country's exchange rate depends on the financiers' ability to manage capital flows between this country and its counterparties (direct connection) and between its counterparties and their trading partners (indirect connection). Empirically, we quantify the network of financial connections using granular data on cross-border claims and liabilities of globally active banks. Consistent with our theoretical predictions, we find that indirect connection can either amplify or mitigate the impact of trade shocks on future exchange rate returns, depending on the shock's origin and size, while direct connection always dampens these effects. |
| JEL: | F21 F30 F31 G12 G15 G21 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19310 |
| By: | Ulrich Matter; Philine Widmer |
| Abstract: | Ownership matters for the media's watchdog role. We map the ownership networks behind thousands of online news outlets in the U.S., Canada, and Europe. The networks reveal who is ultimately responsible for the news: for over half of the outlets, a single entity. The rest sit behind multi-layered structures, making responsibility hard to trace. Market concentration, measured comparably across countries, is largely low to moderate. Looking at content, we find that co-owned outlets report more similarly, even within fixed outlet pairs, as ownership changes -- not least in the U.S., where reader demand is often thought dominant. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.14141 |
| By: | R. B. Bapat; Debapriya Sen |
| Abstract: | We solve a natural bimatrix game related to graphs. We consider a finite directed graph $G=(V, E), $ where the strategy set of Player I is the set of vertices $V$ and that of Player II is the set of edges $E.$ There are two sets of positive weights ${\{\alpha_e\}}_{e\in E}$ and ${\{\beta_e\}}_{e\in E}.$ If Player I chooses a vertex $v$ and Player II chooses an edge $e, $ then the payoff to both players is zero if $v$ and $e$ are not incident. If $e$ originates from $v, $ then Player I obtains $\alpha_e$ and Player II obtains $-\beta_e.$ If $e$ terminates at $v, $ then Player I obtains $-\alpha_e$ and Player II obtains $\beta_e.$ For this game the payoff matrices are weighted incidence matrices of the graph $G.$ We show that when the graph is acyclic, Player I has a unique strategy in any equilibrium. At this strategy, every vertex is chosen with a probability that is proportional to the maximum length over all directed paths originating from that vertex. Defining the path matrix of the graph, it is shown that the set of all equilibrium strategies of Player II is the convex hull of the column vectors of the path matrix. This work extends earlier results of Bapat and Tijs (1997) for zero-sum games. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.13001 |
| By: | Julien Labonne; Pablo Querubín; Martín Rossi; Sebastian M. Saiegh; Ivan San Miguel; Shanker Satyanath |
| Abstract: | Elites maintain disproportionate political power even in formally inclusive political systems, yet the institutions through which they coordinate and reproduce this advantage remain poorly understood. We study membership in the Buenos Aires Jockey Club—Argentina's most prominent elite social club—exploiting staggered variation in family entry. Using difference-in-differences techniques, we find that Jockey Club membership increased the probability of holding legislative office by approximately four percentage points—more than twice the control-group mean. Consistent with a network-based mechanism, membership also increased families' centrality in elite marriage networks—a resource that can facilitate political success through access to party nominations and voter mobilization. This electoral advantage declines substantially after the 1912 Sáenz Peña democratizing reforms, suggesting that the political returns to club membership are conditional on institutional contexts that make elite network connections valuable. Our findings shed light on how elite social institutions reproduce political inequality where personal connections are essential for accessing political office. |
| JEL: | D70 D72 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35611 |