3,263 research outputs found
The Stability and Efficiency of Economic and Social Networks
No full textThis paper studies the formation of networks among individuals. The focus is on the compatibility of overall societal welfare with individual incentives to form and sever links. The paper reviews and synthesizes some previous results on the subject, and also provides new results on the existence of pairwise-stable networks and the relationship between pairwise stable and efficient networks in a variety of contexts and under several definitions of efficiency
Political Bias and War
No full textWe examine the incentives for countries to go to war as they depend on the comparison between how much their pivotal decision-makers have at risk and how much they stand to gain from a war. How this ratio compares to the country at large is what we term "political bias." If there is no political bias, then there are always payments that one country would like to make to the other that will avoid a war in the presence of commitment or enforceability of peace treaties. If there is a bias on the part of one or both countries, then war can result and in some cases cannot be prevented by any transfer payments. We examine how war technology and relative wealth levels interact with political bias in determining whether countries make transfers, go to war, and form alliances. Our results shed some new light on the uneven contender paradox and the interpretation of the "democratic peace"
On the Formation of Networks and Groups
No full textWe provide an introduction to and overview of the volume on Models of the Strategic Formation of Networks and Groups
A Strategic Model of Social and Economic Networks
No full textWe study the stability and efficiency of social and economic networks, when self-interested individuals can form or sever links. First, for two stylized models, we characterize the stable and efficient networks. There does not always exist a stable network that is efficient. Next, we show that this tension persists generally: to assure that there exists a stable network that is efficient, one is forced to allocate resources to nodes that are not responsible for any of the production. We characterize one such allocation rule: the equal split rule, and another rule that arises naturally from bargaining of the players
Stability and Efficiency of Directed Communication Networks
No full textThis paper analyzes the formation of directed networks where selfinterested individuals choose with whom they communicate. The focus of the paper is on whether the incentives of individuals to add or sever links will lead them to form networks that are efficient from a societal viewpoint. It is shown that for some contexts, to reconcile efficiency with individual incentives, benefits must either be redistributed in ways depending on “outsiders” who do not contribute to the productive value of the network, or in ways that violate equity (i.e., anonymity). It is also shown that there are interesting contexts for which it is possible to ensure that efficient networks are individually stable via (re)distributions that are balanced across components of the network, anonymous, and independent of the connections of non-contributing outsiders
An Economic Model of Friendship: Homophily, Minorities, and Segregation
No full textWe develop a model of friendship formation that sheds light on segregation patterns observed in social and economic networks. Individuals have types and see type-dependent benefits from friendships. We examine the properties of a steady-state equilibrium of a matching process of friendship formation. We use the model to understand three empirical patterns of friendship formation: (i) larger groups tend to form more same-type ties and fewer other-type ties than small groups, (ii) larger groups form more ties per capita, and (iii) all groups are biased towards same-type relative to demographics, with the most extreme bias coming from middle-sized groups. We show how these empirical observations can be generated by biases in preferences and biases in meetings. We also illustrate some welfare implications of the model. Copyright 2009 The Econometric Society.
The Formation of Networks with Transfers among Players
No full textWe examine the formation of networks among a set of players whose payoffs depend on the structure of the network. We focus on games where players may bargain by promising or demanding transfer payments when forming links. We examine several variations of the transfer/bargaining aspect of link formation. One aspect is whether players can only make and receive transfers to other players to whom they are directly linked, or whether they can also subsidize links that they are not directly involved in. Another aspect is whether or not transfers related to a given link can be made contingent on the full resulting network or only on the link itself. A final aspect is whether or not players can pay other players to refrain from forming links. We characterize the networks that are supported under these variations and show how each of the above aspects is related either to accounting for a specific type of externality, or to dealing with the combinatorial nature of network payoffs.Networks, Network games, Network formation, Game theory, Efficient networks, Side payments, Transfers, Bargaining, Externalities
Matthew O. Jackson, The Human Network : How Your Social Position Determines Your Power, Beliefs, and Behaviors
No full textThis is a fascinating, compelling and insightful book by Matthew O. Jackson, the William D. Eberle Professor of Economics at Stanford University. Jackson is ideally placed to write a book on social networks, as much of his own published research centers around the topic. Covering a very substantial portion of the relevant literature, the book has as a purpose to introduce the reader to the world of social networks and their far-reaching and often surprising role in human affairs. Unlike most ..
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