1,721,015 research outputs found
Pairwise stable networks in homogeneous societies with weak link externalities
No full textWe study general properties of pairwise stable and pairwise Nash stable networks when players are ex-ante homogeneous. Rather than assuming a particular functional form of utility, we impose general link externality conditions on utility such as ordinal convexity and ordinal strategic complements. Depending on these rather weak notions of link externalities, we show that pairwise Nash stable networks of various structure exist. For stronger versions of the convexity and strategic complements conditions, we are even able to characterize all pairwise stable networks: they are nested split graphs. We illustrate these results with many examples from the literature, including utility functions that arise from games with strategic complements played on the network and utility functions that depend on centrality measures such as Bonacich centrality
Evolution of social networks
Full text linkHellmann T, Staudigl M. Evolution of social networks. European Journal of Operational Research. 2014;234(3):583-596.Modeling the evolution of networks is central to our understanding of large communication systems, and more general, modern economic and social systems. The research on social and economic networks is truly interdisciplinary and the number of proposed models is huge. In this survey we discuss a small selection of modeling approaches, covering classical random graph models, and game-theoretic models to analyze the evolution of social networks. Based on these two basic modeling paradigms, we introduce co-evolutionary models of networks and play as a potential synthesis. (C) 2013 Elsevier B.V. All rights reserved
Networks, beliefs, and asset prices
No full textWe set out a model of the stock market in which investors with heterogeneous beliefs update their type based on the past performance of neighbours in an arbitrary social network.We study how the network structure and the degree of agents’ attention to performance affect the coupled price-type dynamics. Types converge to a group-consensus characterised by network centrality if updating is purely social and to either the group’s most fundamental or most chartist type if updating is purely performance-based, with the time to convergence being finite and proportional to the network diameter. For intermediate cases, we identify two key mechanisms which can make group-consensus non-monotonic with respect to investors’attention to performance. These results shed light on when performance-based updating from social networks is stabilising – or destabilising – for asset prices. As an application, ourmodel can explain price bubbles and price oscillations by network-performance effects
International environmental agreements for local and global pollution
No full textGünther M, Hellmann T. International environmental agreements for local and global pollution. Journal of Environmental Economics and Management. 2017;81:38-58
Networks, beliefs, and asset prices
No full textWe set out a novel social communication model of asset prices. An investor's type – which depends on their network and investment performance – determines their price beliefs. We show how properties of the network such as network centrality and diameter influence the price dynamics, convergence speed, and limiting belief types. For the polar cases of no attention to performance and exclusive attention to performance, we obtain analytically tractable results relating price and belief types to properties of the network, while for intermediate attention to performance we rely on numerical results. As applications, our model can explain price bubbles and price oscillations by network-performance effects, and we also study how price and type dynamics depend on connectedness on a small-world network. Our results shed light on when performance-based updating of beliefs on social networks is stabilising – or destabilising – for asset prices. A key finding is that the impact of network structure on asset prices and beliefs depends on how much attention investors pay to performance
R&D Investments Under Endogenous Cluster Formation
No full textDawid H, Hellmann T. R&D Investments Under Endogenous Cluster Formation. Journal of Economic Behavior and Organization. 2020;174:253-283
Communication, networks and asset price dynamics: a survey
No full textIn this paper we provide a wide-ranging survey of the state of the art in the areaof communication and asset price dynamics. We start out by documenting empirical evidence that social communication influences investment decisions and asset prices, before turning to the main modelling approaches in the literature (both past and present). We discuss models of belief-updating based on observed performance; models of herd behaviour; and models with social interactions that arise from preferences for conformity or contrarianism. Our main contribution is to introduce readers to a social network approach which has been widely used in the opinion dynamics literature, but only recently applied to asset pricing. In the final part we show how recent contributions to both modelling and empirical work are using the social network approach to improveour understanding of financial markets and asset price dynamics. We conclude with some thoughts on fruitful avenues for future research
The Evolution of R&D Networks
Full text linkDawid H, Hellmann T. The Evolution of R&D Networks. Journal of Economic Behavior and Organization. 2014;105:158-172.We study the evolution of R&D networks in a Cournot model whererms may lower marginal costs due to bilateral R&D collaborations. Stochastically stable R&D networks exhibit the dominant group architecture, and, contrary to the existing literature, generically unique predictions about the size of the dominant group can be obtained. This size decreases monotonically with respect to the cost of link formation and there exists a lower bound on the size of the dominant group for non-empty networks. Stochastically stable networks are always inefficient and an increase in linking costs has a non-monotone effect on average industry profits
Strategic formation of homogeneous bargaining networks
Full text linkGauer F, Hellmann T. Strategic formation of homogeneous bargaining networks. GAMES AND ECONOMIC BEHAVIOR. 2017;106:51-74.We study a model of strategic network formation prior to a Manea (2011a) bargaining game: ex ante homogeneous players form costly undirected links, anticipating expected equilibrium payoffs from the subsequent bargaining game. Assuming patient players, we provide a complete characterization of generically pairwise stable networks: specific unions of separated pairs, odd circles, and isolated players constitute this class. We also show that many other structures, such as larger trees or unbalanced bipartite networks, cannot be pairwise stable at all. The analysis implies that the diversity of possible bargaining outcomes is small in (generically) pairwise stable networks. (C) 2017 Elsevier Inc. All rights reserved
The dynamics of continuous cultural traits in social networks
No full textBuechel B, Hellmann T, Pichler MM. The dynamics of continuous cultural traits in social networks. Journal of Economic Theory. 2014;154:274-309
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