Connections : An Introduction to the Economics of Networks

by Goyal, Sanjeev

• ISBN13: 9781400829163
• ISBN10: 140082916X
• Copyright: 2008-06-01
• Publisher: Princeton Univ Pr

Summary

Networks pervade social and economic life, and they play a prominent role in explaining a huge variety of social and economic phenomena. Standard economic theory did not give much credit to the role of networks until the early 1990s, but since then the study of the theory of networks has blossomed. At the heart of this research is the idea that the pattern of connections between individual rational agents shapes their actions and determines their rewards. The importance of connections has in turn motivated the study of the very processes by which networks are formed.InConnections, Sanjeev Goyal puts contemporary thinking about networks and economic activity into context. He develops a general framework within which this body of research can be located. In the first part of the book he demonstrates that location in a network has significant effects on individual rewards and that, given this, it is natural that individuals will seek to form connections to move the network in their favor. This idea motivates the second part of the book, which develops a general theory of network formation founded on individual incentives. Goyal assesses the robustness of current research findings and identifies the substantive open questions. Written in a style that combines simple examples with formal models and complete mathematical proofs,Connectionsis a concise and self-contained treatment of the economic theory of networks, one that should become the natural source of reference for graduate students in economics and related disciplines.

Table of Contents

Acknowledgements	p. ix
Introduction	p. 1
Themes	p. 1
Networks in Economics	p. 4
The Economic Approach and Other Subjects	p. 7
A Note on Style	p. 8
Networks: Concepts and Empirics	p. 9
Introduction	p. 9
Concepts	p. 9
Properties of Empirical Networks	p. 20
Games on Networks	p. 25
Introduction	p. 25
General Model	p. 27
Applications	p. 34
Discussion of Two Assumptions	p. 49
Concluding Remarks	p. 53
Appendix	p. 55
Coordination and Cooperation	p. 63
Introduction	p. 63
Coordination Games	p. 66
Games of Conflict	p. 75
Concluding Remarks	p. 80
Appendix	p. 81
Social Learning	p. 87
Introduction	p. 87
Theoretical Framework	p. 89
Learning from Neighbors	p. 94
Related Themes	p. 102
Concluding Remarks	p. 104
Appendix	p. 105
Social Networks in Labor Markets	p. 113
Introduction	p. 113
The Social Transmission of Job Information	p. 116
Adverse Selection and Referrals	p. 120
The Use of Social Networks: Empirical Evidence	p. 124
Concluding Remarks	p. 128
Appendix	p. 128
Strategic Network Formation: Concepts	p. 143
Introduction	p. 143
One-Sided Links	p. 147
Two-Sided Links	p. 150
Efficiency and Equity	p. 158
Concluding Remarks	p. 158
Appendix	p. 159
One-Sided Link Formation	p. 163
Introduction	p. 163
A Simple Model of Link Formation	p. 165
Extensions	p. 171
Experiments and Empirical Regularities	p. 182
Research in Other Subjects	p. 185
Concluding Remarks	p. 188
Appendix	p. 188
Two-Sided Link Formation	p. 199
Introduction	p. 199
Network Formation: Four Applications	p. 200
Stability and Efficiency	p. 215
Unequal Degrees and Payoffs	p. 221
Concluding Remarks	p. 227
Appendix	p. 229
Research Collaboration among Firms	p. 245
Introduction	p. 245
Why Extensive and Nonexclusive Links?	p. 247
Collaboration among Competing Firms	p. 249
Related Themes	p. 259
Empirical Patterns	p. 262
Concluding Remarks	p. 265
Appendix	p. 266
References	p. 271
Index	p. 285
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