23,245 research outputs found
Recommended from our members
Individual security, contagion, and network design
Individuals derive benefits from their connections, but these may expose them to external threats. Agents therefore invest in security to protect themselves. What are the network architectures that maximize collective welfare? We propose a model to explore the tension between connectivity and exposure to an external threat when security choices are decentralized. We find that both over-investment and under-investment in security are possible, and that optimal network architectures depend on the prevailing source of inefficiencies. Social welfare may be maximized in sparse connected networks when under-investment pressures are present, and fragmented networks when over-investment pressures prevail.Sanjeev Goyal and Diego Cerdeiro were supported by European Research Area Complexity-Net (http://www.complexitynet.eu) through grant, Resilience and interaction of networks in ecology and economics (RESINEE). Diego Cerdeiro acknowledges financial support from Queens' College and the Cambridge Overseas Trust. Marcin Dziubiński was supported by the Strategic Resilience of Networks project realized within the Homing Plus programme of the Foundation for Polish Science, co-financed by the European Union from the Regional Development Fund within Operational Programme Innovative Economy (“Grants for Innovation”). Sanjeev Goyal acknowledges financial support from a Keynes Fellowship and the Cambridge-INET Institute
Spreading in Social Systems: Reflections
In this final chapter, we consider the state-of-the-art for spreading in
social systems and discuss the future of the field. As part of this reflection,
we identify a set of key challenges ahead. The challenges include the following
questions: how can we improve the quality, quantity, extent, and accessibility
of datasets? How can we extract more information from limited datasets? How can
we take individual cognition and decision making processes into account? How
can we incorporate other complexity of the real contagion processes? Finally,
how can we translate research into positive real-world impact? In the
following, we provide more context for each of these open questions.Comment: 7 pages, chapter to appear in "Spreading Dynamics in Social Systems";
Eds. Sune Lehmann and Yong-Yeol Ahn, Springer Natur
Strategic Investment in Protection in Networked Systems
We study the incentives that agents have to invest in costly protection
against cascading failures in networked systems. Applications include
vaccination, computer security and airport security. Agents are connected
through a network and can fail either intrinsically or as a result of the
failure of a subset of their neighbors. We characterize the equilibrium based
on an agent's failure probability and derive conditions under which equilibrium
strategies are monotone in degree (i.e. in how connected an agent is on the
network). We show that different kinds of applications (e.g. vaccination,
malware, airport/EU security) lead to very different equilibrium patterns of
investments in protection, with important welfare and risk implications. Our
equilibrium concept is flexible enough to allow for comparative statics in
terms of network properties and we show that it is also robust to the
introduction of global externalities (e.g. price feedback, congestion).Comment: 32 pages, 3 figure
Statistically validated network of portfolio overlaps and systemic risk
Common asset holding by financial institutions, namely portfolio overlap, is
nowadays regarded as an important channel for financial contagion with the
potential to trigger fire sales and thus severe losses at the systemic level.
In this paper we propose a method to assess the statistical significance of the
overlap between pairs of heterogeneously diversified portfolios, which then
allows us to build a validated network of financial institutions where links
indicate potential contagion channels due to realized portfolio overlaps. The
method is implemented on a historical database of institutional holdings
ranging from 1999 to the end of 2013, but can be in general applied to any
bipartite network where the presence of similar sets of neighbors is of
interest. We find that the proportion of validated network links (i.e., of
statistically significant overlaps) increased steadily before the 2007-2008
global financial crisis and reached a maximum when the crisis occurred. We
argue that the nature of this measure implies that systemic risk from fire
sales liquidation was maximal at that time. After a sharp drop in 2008,
systemic risk resumed its growth in 2009, with a notable acceleration in 2013,
reaching levels not seen since 2007. We finally show that market trends tend to
be amplified in the portfolios identified by the algorithm, such that it is
possible to have an informative signal about financial institutions that are
about to suffer (enjoy) the most significant losses (gains)
Scalable Byzantine Reliable Broadcast
Byzantine reliable broadcast is a powerful primitive that allows a set of processes to agree on a message from a designated sender, even if some processes (including the sender) are Byzantine. Existing broadcast protocols for this setting scale poorly, as they typically build on quorum systems with strong intersection guarantees, which results in linear per-process communication and computation complexity.
We generalize the Byzantine reliable broadcast abstraction to the probabilistic setting, allowing each of its properties to be violated with a fixed, arbitrarily small probability. We leverage these relaxed guarantees in a protocol where we replace quorums with stochastic samples. Compared to quorums, samples are significantly smaller in size, leading to a more scalable design. We obtain the first Byzantine reliable broadcast protocol with logarithmic per-process communication and computation complexity.
We conduct a complete and thorough analysis of our protocol, deriving bounds on the probability of each of its properties being compromised. During our analysis, we introduce a novel general technique that we call adversary decorators. Adversary decorators allow us to make claims about the optimal strategy of the Byzantine adversary without imposing any additional assumptions. We also introduce Threshold Contagion, a model of message propagation through a system with Byzantine processes. To the best of our knowledge, this is the first formal analysis of a probabilistic broadcast protocol in the Byzantine fault model. We show numerically that practically negligible failure probabilities can be achieved with realistic security parameters
- …