Merit, Approbation and the Evolution of Social Structure

In this paper we study a society in which individuals gain utility from income and from social approbation. Income is correlated with class. Approbation is given to an unobservable trait, which must be signalled through the agent’s social mobility, i.e. class change. Mobility is driven by a simple mechanism involving inheritance, effort and ability. Thus social structure (class composition) is affected by individuals’ quest for approbation, and we study how that affects the emergence and multiplicity of long run social organizations, including hybrid forms of dynasties and meritocracies. Specifically we observe that even though social mobility is driven purely by a meritocratic mechanism, pure dynasties can emerge. We then introduce a feedback between the size of the upper class and its income value, so that effort levels and social structure are jointly endogenous. We derive results on equilibrium effort levels and stationary (when they exist) social structures. Social organization can converge to a unique steady state, multiple long run equilibria or cycles.Economics of Technology;

Information Technology and the Dynamics of Joint Innovation

We develop a model of an innovative industry to examine how information technology, by both enhancing matching efficiency and knowledge sharing, can have an ambiguous effect on the total amount of innovation. We consider a population of firms holding different knowledge expertise, and forming partnerships to conduct joint R&D. We assume that bringing together different expertise has positive value for innovating but also that joint innovation implies a partial convergence of the partners'' expertise. We study how the distribution of firms changes and thus how the innovative potential of the economy evolves. We show that as heterogeneity is used as an input by the innovative process, the industry must eventually collapse to a unique expertise, but how fast this takes place depends on the quality of IT. As a result of falling dispersion, a tension arises between static and dynamic efficiency. JEL Classification Numbers: C78,O33,O38.mathematical economics and econometrics ;

Social Sorting

This paper is about the behaviour of a society in which learning individuals play a Prisoner’s Dilemma that guides social promotion and demotion. The direct effect of the payoff-based socialization that is implemented here is segregation. However, segregation permits the survival of cooperation as it (unintendedly) preserves cooperators from detrimental interactions with defectors. Very large amounts of cooperation can be observed in the long run.microeconomics ;

If the Alliance Fits . . . : Innovation and Network Dynamics.

Network formation is often said to be driven by social capital considerations. A typical pattern observed in the empirical data on strategic alliances is that of small world networks: dense subgroups of firms interconnected by (few) clique-spanning ties. The typical argument is that there is social capital value both to being embedded in a dense cluster, and to bridging disconnected clusters. In this paper we develop and analyze a simple model of joint innovation where we are able to reproduce these features, based solely on the assumption that successful partnering demands some intermediate amount of similarity between the partners.

Structural Holes, Innovation and the Distribution of Ideas

We model knowledge diffusion in a population of agents situated on a network, interacting only over direct ties. Some agents are by nature traders, others are by nature "givers": traders demand a quid pro quo for information transfer; givers do not. We are interested in efficiency of diffusion and explore the interplay between the structure of the population (proportion of traders), the network structure (clustering, path length and degree distribution), and the scarcity of knowledge. We find that at the global level, trading (as opposed to giving) reduces efficiency. At the individual level, highly connected agents do well when knowledge is scarce, agents in clustered neighbourhoods do well when it is abundant. The latter finding is connected to the debate on structural holes and social capital.Innovation, Diffusion of Innovations, Knowledge, Information, Networks

If the Alliance Fits . . . : Innovation and Network Dynamics

Network formation is often said to be driven by social capital considerations. A typical pattern observed in the empirical data on strategic alliances is that of small world networks: dense subgroups of firms interconnected by (few) clique-spanning ties. The typical argument is that there is social capital value both to being embedded in a dense cluster, and to bridging disconnected clusters. In this paper we develop and analyze a simple model of joint innovation where we are able to reproduce these features, based solely on the assumption that successful partnering demands some intermediate amount of similarity between the partners.Network formation, Strategic alliances, Knowledge portfolios, Knowledge transfer

Marriage with Labor Supply

We propose a search-matching model of the marriage market that extends Shimer and Smith (2000) to allow for labor supply. We characterize the steady-state equilibrium when exogenous divorce is the only source of risk. The estimated matching probabilities that can be derived from the steady-state flow conditions are strongly increasing in both male and female wages. We estimate that the share of marriage surplus appropriated by the man increases with his wage and that the share appropriated by the woman decreases with her wage. We find that leisure is an inferior good for men and a normal good for women.Marriage search model, collective labor supply, structural estimation.

Agglomeration Effects and the Competition for Firms

A two-region economy consists of a given but different number of immobile workers in each region, and a given number of mobile firms. Firms create jobs where they locate, but there is frictional unemployment. Two sorts of agglomeration effects arise: those from economies of scale in matching, and those from production economies external to the firm. Regions may either be part of a unitary state in which case all regional policies are decided by the central government, or they may abe part of a federal state in which case some policies are determined by the regional governments. We characterize the resource allocations in both a unitary and a federal state, and identify the set of instruments that are required to replicate the social optimum in each state.Agglomeration, Inter-Jurisdictional Competititon, Unemployment

Fits and Misfits: Technological Matching and R&D Networks

This paper presents an economic model of R&D network formation through the creation of strategic alliances. Firms are randomly endowed with knowledge elements. They base their alliance decisions purely on the technological fit of potential partners, ignoring social capital considerations and indirect benefits on the network. This is sufficient to generate equilibrium networks with the small world properties of observed alliance networks, namely short pairwise distances and local clustering. The equilibrium networks are more clustered than "comparable" random graphs, while they have similar characteristic path length. Two extreme regimes of competition are examined, to show that while the competition has a quantitative effect on the equilibrium networks (density is lower with competition), the small world features of the equilibrium networks are preserved.network formation, small worlds, R&D networks, strategic alliances, business clusters

Knowledge Dynamics in a Network Industry

In this paper, we model the impact of networks on knowledge growth in an in-novatingindustry. Specifically, we compare two mediums of knowledge exchange;random interaction, and the case in which interaction occurs on a fixed architec-ture.In a simulation study, we investigate how the medium of knowledge exchangecontributes to knowledge growth under di fferent scenarios related to the industryâsinnovative potential. We measure innovative potential by considering the extent towhich knowledge can be codified, and the available technological opportunities. Ourresults tend to support the conjecture that spatial clustering generates higher longrun knowledge growth rates in industries characterized by highly tacit knowledge,while the opposite is true when the degree of codification is important.Key Words: Network, Network Industry, Clustering, Innovation, Knowledge.economics of technology ;