- Series Information
- The Oxford Handbook of the Economics of Networks
- List of Contributors
- Introduction to the Handbook
- Networks: A Paradigm Shift for Economics?
- Networks in Economics: A Perspective on the Literature
- The Past and Future of Network Analysis in Economics
- Games Played on Networks
- Repeated Games and Networks
- Stochastic Network Formation and Homophily
- Network Formation Games
- Links and Actions in Interplay
- Conflict and Networks
- Key Players
- Some Challenges in the Empirics of the Effects of Networks
- Econometrics of Network Formation
- Small-World Networks
- Networked Experiments
- Field Experiments, Social Networks, and Development
- Networks in the Laboratory
- Diffusion in Networks
- Learning in Social Networks
- Financial Contagion in Networks
- Networks, Shocks, and Systemic Risk
- Informal Transfers in Social Networks
- Community Networks and Migration
- Social Networks and the Labor Market
- Attention in Organizations
- Models of Bilateral Trade in Networks
- Strategic Models of Intermediation Networks
- Networks in International Trade
- Targeting and Pricing in Social Networks
- Managing Social Interactions
- Economic Features of the Internet and Network Neutrality
Abstract and Keywords
This chapter develops a unified framework for the study of how network interactions can function as a mechanism for propagation and amplification of microeconomic shocks. The framework nests various classes of games over networks, models of macroeconomic risk originating from microeconomic shocks, and models of financial interactions. Under the assumption that shocks are small, the authors provide a fairly complete characterization of the structure of equilibrium, clarifying the role of network interactions in translating microeconomic shocks into macroeconomic outcomes. This characterization provides a ranking of different networks in terms of their aggregate performance. It also sheds light on several seemingly contradictory results in the prior literature on the role of network linkages in fostering systemic risk.
Daron Acemoglu is Charles Kindleberger Professor of Applied Economics at the Department of Economics at MIT; he is also winner of the 2005 John Bates Clark Medal.
Asu Ozdaglar, Professor, Department of Electrical Engineering and Computer Science, MIT
Alireza Tahbaz-Salehi, Assistant Professor of Decision, Risk, & Operations, Columbia Business School
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