The Oxford Handbook Of The Economics Of Networks

Description

The Oxford Handbook of the Economics of Networks represents the frontier of research into how and why networks they form, how they influence behavior, how they help govern outcomes in an interactive world, and how they shape collective decision making, opinion formation, and diffusion dynamics. From a methodological perspective, the contributors to this volume devote attention to theory, field experiments, laboratory experiments, and econometrics. Theoretical work in network formation, games played on networks, repeated games, and the interaction between linking and behavior is synthesized. A number of chapters are devoted to studying social process mediated by networks. Topics here include opinion formation, diffusion of information and disease, and learning. There are also chapters devoted to financial contagion and systemic risk, motivated in part by the recent financial crises. Another section discusses communities, with applications including social trust, favor exchange, and social collateral; the importance of communities for migration patterns; and the role that networks and communities play in the labor market. A prominent role of networks, from an economic perspective, is that they mediate trade. Several chapters cover bilateral trade in networks, strategic intermediation, and the role of networks in international trade. Contributions discuss as well the role of networks for organizations. On the one hand, one chapter discusses the role of networks for the performance of organizations, while two other chapters discuss managing networks of consumers and pricing in the presence of network-based spillovers. Finally, the authors discuss the internet as a network with attention to the issue of net neutrality. Cover......Page 1 Half Title......Page 2 Title Page......Page 4 Copyright page......Page 5 Contents......Page 6 List of Contributors......Page 10 Half Title......Page 14 Part I Introduction......Page 16 1.1 Foreword......Page 18 1.2 Overview......Page 19 Part II Perspectives......Page 26 Chapter 2 Networks: A Paradigm Chift for Economics?......Page 28 2.1 Markets......Page 35 2.2 Networks in the Financial Sector......Page 42 2.3 Conclusion......Page 57 3.1 Introduction......Page 62 3.2 Networks in Economics: A SignificantDeparture......Page 63 3.3 The Origins of Networks......Page 68 3.4 The Route to Normal Science: Prices,Competition, and Networks......Page 73 3.5 Closing the Circle......Page 79 4.1 An Explosion of Research onNetworks in Economics......Page 86 4.2 Successes:What Economics hasBrought to the Table......Page 87 4.3 A Bucket List......Page 89 4.4 Closing Thoughts......Page 93 Part III Network Games and Network Formation......Page 96 5.1 Introduction......Page 98 5.2 Games on a Network and (Modified)Linear Best Replies......Page 100 5.3 Examples of Games in the Literature......Page 104 5.4 Unconstrained Actions......Page 106 5.5 Tools for Constrained Actions:Potential Function......Page 109 5.6 Equilibria in ConstrainedContinuous Action Games......Page 111 5.7 Binary Action / Threshold Games......Page 118 5.8 Econometrics of Social Interactions......Page 121 5.9 Conclusion......Page 123 6.1 Introduction......Page 128 6.2 A Baseline Setup......Page 129 6.3 Limiting Results and Network......Page 133 6.4 FixedDiscounting and NetworkAmplification......Page 137 6.5 FixedDiscounting andCommunication......Page 142 6.6 Comments: Applications andOmissions......Page 147 7.1 Introduction......Page 153 7.2 One-shotModels with a FixedPopulation......Page 156 7.3 Network Formation with a GrowingPopulation......Page 160 7.4 Dynamic Network Formation......Page 165 7.5 Homophily......Page 168 7.6 Conclusion......Page 175 8.1 Indroduction......Page 182 8.2 Network Formation: SolutionConcepts......Page 183 8.3 SomeModels of Economic Networks......Page 193 8.4 Conclusion......Page 202 9.1 Introduction......Page 206 9.2 Coordination......Page 207 9.3 Cooperation......Page 211 9.4 Intermediation......Page 215 9.5 Additional Contexts......Page 219 9.6 Summing Up......Page 225 10.1 Introduction......Page 230 10.2 NetworkDesign andDefense......Page 232 10.3 Resources, Conflict, and Networks......Page 248 10.4 Alliances, Networks, and Conflict......Page 252 10.5 Concluding Remarks......Page 255 11.1 Introduction......Page 259 11.2 Key Players: TheoreticalConsiderations......Page 261 11.3 Key Players: Empirical Results......Page 275 11.4 Concluding Remarks......Page 283 Part IV Empirics and Experiments......Page 290 12.1 Introduction......Page 292 12.2 What Has Been Learned About theEffects of Social Networks onPolicyOutcomes ?......Page 295 12.3 SocialMultiplier in Networks......Page 298 12.4 Types of Network Structures......Page 304 12.5 Using Proxy Variables......Page 311 12.6 Conclusion......Page 313 13.1Introduction......Page 318 13.2 Stylized Facts......Page 324 13.3 Conditional Edge-Independence......Page 327 13.4 Higher-Order Dependence......Page 340 13.5 Conclusion......Page 368 14.1 Introduction......Page 373 14.2 The Topological Small-WorldHypothesis......Page 375 14.3 The Algorithmic Small-WorldProblem......Page 380 14.4 Economic Implications......Page 385 Acknowledgments......Page 386 15.1 Embracing Interdependence......Page 391 15.2 Design of Networked Experiments......Page 399 15.3 Analysis of Networked Experiments......Page 407 15.4 The Future ofNetworkedExperimentation......Page 416 15.5 Conclusion......Page 420 16.1 Introduction......Page 427 16.2 Design and Implementation issues......Page 428 16.3 Social Learning andDiffusion......Page 433 16.4 Other-Regarding Preferences andSocial Networks......Page 440 16.5 Public Commitments, Peer Monitoring, and Enforcement......Page 442 16.6 Risk-Sharing......Page 444 16.7 Network Formation and Change......Page 446 16.8 Conclusion andOpen Issues......Page 448 17.1 Introduction......Page 455 17.2 Games on Networks......Page 457 17.3 Markets and Networks......Page 476 17.4 FutureDirections......Page 482 Part V Diffusion, Learning, and Contagion......Page 492 Chapter 18 Diffusion in Networks......Page 494 18.1 Simple ContagionModels......Page 495 18.2 More Sophisticated Agents......Page 506 18.3 Looking Forward......Page 514 19.2 The Sequential SocialLearningModel......Page 519 19.3 Repeated Linear Updating(DeGroot)Models......Page 532 19.4 Repeated Bayesian Updating......Page 549 19.5 Final Remarks......Page 554 20.1 Introduction......Page 558 20.2 Contagion through ShockTransmission......Page 559 20.3 Informational Contagion......Page 573 21.1 Introduction......Page 584 21.2 General Framework......Page 590 21.3 Smooth Economies......Page 597 21.4 Ex Ante Aggregate Performance......Page 605 21.5 Systemically Important Agents......Page 611 21.6 Conclusion......Page 615 Part VI Communities......Page 624 22.1 Introduction......Page 626 22.2 Empirical Facts......Page 627 22.3 Informal Lending and Trust......Page 628 22.4 Consumption Risk-Sharing......Page 633 22.5 OtherMechanisms......Page 640 22.6 Conclusion......Page 642 23.1 Introduction......Page 645 23.2 Migrant Networks inHistoricalPerspective......Page 647 23.3 IdentifyingMigrant Networks......Page 650 23.4 Migrant Networks and Inequality......Page 655 23.5 The Intergenerational DynamicsofMigration......Page 657 23.6 Conclusion......Page 659 24.1 Introduction......Page 664 24.2 Role of Networks in theLaborMarket......Page 665 24.3 Empirical Evidence......Page 673 24.4 Unintended Consequences......Page 680 24.5 Conclusion......Page 682 Part VII Organizations and Markets......Page 688 25.1 Introduction......Page 690 25.2 The Role of Attention NetworkswithinOrganizations......Page 693 25.3 Organizational Focus: Convexitiesin Attention Networks......Page 699 25.4 Communication and Influence inAttention Networks: InteriorSolutions......Page 704 25.5 Conclusions......Page 709 26.1 Introduction......Page 713 26.2 Framework......Page 715 26.3 Non-Stationary BargainingModels......Page 718 26.4 Bargaining in Stationary Networks......Page 730 26.5 The Assignment Game and RelatedNoncooperativeModels......Page 736 26.6 Conclusion......Page 744 27.1 Introduction......Page 748 27.2 Intermediation......Page 750 27.3 Pricing in Supply Chains......Page 763 27.4 Discussion and OpenQuestions......Page 766 28.1 Information Networks in Trade......Page 769 28.2 Ethnic Networks and the Patternsof International Trade......Page 778 28.3 Production Networks andFirm-to-Firm Trade......Page 785 29.1 Introduction......Page 791 29.2 Information Externalities......Page 792 29.3 Consumption Externalities......Page 801 29.4 OpenQuestions......Page 804 Chapter 30 Managing Social interactions......Page 807 30.1 Firm as Observer......Page 808 30.2 Firm as Influencer......Page 814 30.4 Conclusion and FutureDirections......Page 821 31.1 Introduction andOrganization......Page 825 31.2 General Structure of the Internet......Page 826 31.3 Residential Broadband AccessNetworks and Network Neutrality......Page 827 31.4 Regulatory Actions......Page 835 31.5 Concluding Remarks......Page 836 Index......Page 838