Why Study Networks?

  • Many economic, political, and social interactions are shaped by the local structure of relationships:

    • trade of goods and services, most markets are not centralized!...
    • sharing of information, favors, risk,...
    • transmission of viruses, opinions...
    • access to info about jobs...
    • choices of behavior, education...
    • political alliances, trade alliances...

  • Social networks influence behavior

    • crime, employment, human capital, voting, smoking,
    • networks exhibit heterogeneity, but also have enough underly structure to model

Primary Questions:

  • What do we know about network structure?

  • How do networks form? Do the'right' networks form?

  • How do networks influence behavior? and vice versa...

Synthesize

  • Many literatures deal with networks

    • Sociology
    • Economics
    • Computer Science
    • Statistical Physics
    • Math (random graph)...

  • What have we learned? What are important areas for future research?

Three Areas for Research

  • Theory

    • network formation, dynamics, design...
    • now networks influence behavior
    • evolution?

  • Empirical and experimental work

    • observe networks, patterns, influence
    • test theory and identify regularities

  • Methodology

    • how to measure and analyze networks

Central Focus

  • Models for analyzing and understanding networks:

    • Random graph methods

    • Strategic, game theoretic techniques

    • hybrids, statistical models

Models

  • Provide insight into why we see certain phenomena

    • Why do social networks have short average path lengths?

  • Allow for comparative statics:

    • How does compoment structure change with density? Important in contagion/diffusion/learning...

  • Predict out of sample:

    • What will happen with a new policy (vaccine, R&D subsidy,...)?

  • Allow for statistical estimation:

    • Is there significant clustering on a local level or did it appear at random?

Outline

  • Part 1: Background and Fundamentals

    • Definitions and Characteristics of Networks (1,2)
    • Empirical Background (3)

  • Part 2: Network Formation

    • Random Network Models (4,5)
    • Strategic Network Models (6,11)

  • Part 3: Networks and Behavior

    • Diffusion and Learning (7,8)
    • Games on Networks (9)