Debunking Rumors in Networks

We study the diffusion of a true and a false message (the rumor) in a social network. Upon hearing a message, individuals may believe it, disbelieve it, or debunk it through costly verification. Whenever the truth survives in steady state, so does the rumor. Online social communication exacerbates relative rumor prevalence as long as it increases homophily or verification costs. Our model highlights that successful policies in the fight against rumors increase individuals' incentives to verify

The dynamics of innovations and citations

We present a model in which patent citations occur as new ideas are produced from combinations of existing ideas. An idea's usability in this process is represented as an interval in a variety space of ideas, whose length determines the likelihood of citation. This process endogenously derives exponential aging of patents, which is consistent with empirical observations. The endogeneity of aging sets our process apart from the standard preferential attachment literature

Risk aversion in a model of endogenous growth

Despite the evidence on incomplete financial markets and substantial risk being borne by innovators, current models of growth through creative destruction predominantly model innovators’ as risk neutral. Risk aversion is expected to reduce the incentive to innovate and we might fear that without insurance innovation completely disappears in the long run. The present paper introduces risk averse agents into an occupational choice model of endogenous growth in which insurance against failure to innovate is not available. We derive a clear negative relationship between the level of risk aversion and long run growth. Surprisingly, we show that in an equilibrium there exists a cut-off value of risk aversion below which the growth rate of the mass of innovators tends to a strictly positive constant. In this case, innovation persists on the long run and consumption per capita grows at a strictly positive rate. On the other hand, for levels of risk aversion above the cut-off value, the economy eventually stagnates

Diffusion of multiple information: On information resilience and the power of segregation

We introduce two pieces of information (memes) into a diffusion process in which memes are transmitted when agents meet and forgotten at an exogenous rate. At most one meme can be transmitted at each meeting, which one depends on preferences over memes. We find that the conditions under which a unique meme becomes endemic are sufficient for both to become endemic. Segregation according to information preferences leads to polarization, i.e., nobody is informed of both memes, and a loss of information. We show how the likelihood of segregation depends on information preferences and on parameters of the diffusion process

Diffusion of Multiple Information: On Information Resilience and the Power of Segregation

We introduce two pieces of information, denoted memes, into a diffusion process in which memes are transmitted when individuals meet and forgotten at an exogenous rate. At most one meme can be transmitted at a meeting, which introduces opportunity costs in the process. Individuals differ according to which meme they find more interesting, and that is the one they transmit if they face a choice. We find that both memes survive under the same parameter values, and that relative interest is the main determinant in the number of people informed of a meme in the long run. We apply our framework to analyze the impact of segregation and find that segregation leads to polarization. Segregation also reduces the overall number of people informed in the long run. Our final set of results shows that agents are more likely to prefer segregation if their information preferences are more extreme, if they have few social contacts, or if they prefer a meme that is preferred by only a small fraction of the population

Diffusion of Multiple Information: On Information Resilience and the Power of Segregation?

We introduce two pieces of information (memes) into a diffusion process in which memes are transmitted when agents meet and forgotten at an exogenous rate. At most one meme can be transmitted at each meeting, which one depends on preferences over memes. We find that the conditions under which a unique meme becomes endemic are sufficient for both to become endemic. Segregation according to information preferences leads to polarization, i.e., nobody is informed of both memes, and a loss of information. We show how the likelihood of segregation depends on information preferences and on parameters of the diffusion process

Risk Aversion in a Model of Endogenous Growth

Despite the evidence on incomplete financial markets and substantial risk being borne by innovators, current models of growth through creative destruction predominantly model innovators’ as risk neutral. Risk aversion is expected to reduce the incentive to innovate and we might fear that without insurance innovation completely disappears in the long run. The present paper introduces risk averse agents into an occupational choice model of endogenous growth in which insurance against failure to innovate is not available. We derive a clear negative relationship between the level of risk aversion and long run growth. Surprisingly, we show that in an equilibrium there exists a cut-off value of risk aversion below which the growth rate of the mass of innovators tends to a strictly positive constant. In this case, innovation persists on the long run and consumption per capita grows at a strictly positive rate. On the other hand, for levels of risk aversion above the cut-off value, the economy eventually stagnates

Risk Aversion in a Model of Endogenous Growth

Despite the evidence on incomplete financial markets and substantial risk being borne by innovators, current models of growth through creative destruction predominantly model innovators’ as risk neutral. Risk aversion is expected to reduce the incentive to innovate and we might fear that without insurance innovation completely disappears in the long run. The present paper introduces risk averse agents into an occupational choice model of endogenous growth in which insurance against failure to innovate is not available. We derive a clear negative relationship between the level of risk aversion and long run growth. Surprisingly, we show that in an equilibrium there exists a cut-off value of risk aversion below which the growth rate of the mass of innovators tends to a strictly positive constant. In this case, innovation persists on the long run and consumption per capita grows at a strictly positive rate. On the other hand, for levels of risk aversion above the cut-off value, the economy eventually stagnates

Cann Rumors Create Truth? Optimal Debunking of Rumors in Networks

We study the diffusion of a true and a false message when agents are biased towards one of the messages and able to verify messages. A recipient of a rumor who verifies it becomes informed of the truth. Consequently, a higher rumor prevalence increases the prevalence of the truth. We employ this result to discuss how a planner may optimally choose information verification rates of the population. We find that a planner who aims to maximize the prevalence of the truth may find it optimal to allow rumors to circulate