73 research outputs found
Pricing in Social Networks with Negative Externalities
We study the problems of pricing an indivisible product to consumers who are
embedded in a given social network. The goal is to maximize the revenue of the
seller. We assume impatient consumers who buy the product as soon as the seller
posts a price not greater than their values of the product. The product's value
for a consumer is determined by two factors: a fixed consumer-specified
intrinsic value and a variable externality that is exerted from the consumer's
neighbors in a linear way. We study the scenario of negative externalities,
which captures many interesting situations, but is much less understood in
comparison with its positive externality counterpart. We assume complete
information about the network, consumers' intrinsic values, and the negative
externalities. The maximum revenue is in general achieved by iterative pricing,
which offers impatient consumers a sequence of prices over time.
We prove that it is NP-hard to find an optimal iterative pricing, even for
unweighted tree networks with uniform intrinsic values. Complementary to the
hardness result, we design a 2-approximation algorithm for finding iterative
pricing in general weighted networks with (possibly) nonuniform intrinsic
values. We show that, as an approximation to optimal iterative pricing, single
pricing can work rather well for many interesting cases, but theoretically it
can behave arbitrarily bad
Favoritism
Favoritism refers to the act of offering jobs, contracts and resources to members of one's own social group in preference to others who are outside the group. This paper examines the economic origins and the consequences of favoritism.
We argue that favoritism is a mechanism for surplus diversion away from the society at large and toward the group. As it usually entails inefficiencies, favoritism highlights the role of frictions in economic exchange. Favoritism is easier to sustain in a small homogenous group and when there is heterogeneity across groups. Favoritism has negative effects on incentives to undertake investments and innovation. These predictions appear to be consistent with empirical evidence.Yann Bramoullé thanks the European Research Council through Consolidator Grant no. 616442 and Sanjeev Goyal thanks the Cambridge-INET Institute and the Keynes Fellowship
The Networked Common Goods Game
We introduce a new class of games called the networked common goods game
(NCGG), which generalizes the well-known common goods game. We focus on a
fairly general subclass of the game where each agent's utility functions are
the same across all goods the agent is entitled to and satisfy certain natural
properties (diminishing return and smoothness). We give a comprehensive set of
technical results listed as follows.
* We show the optimization problem faced by a single agent can be solved
efficiently in this subclass. The discrete version of the problem is however
NP-hard but admits an fully polynomial time approximation scheme (FPTAS).
* We show uniqueness results of pure strategy Nash equilibrium of NCGG, and
that the equilibrium is fully characterized by the structure of the network and
independent of the choices and combinations of agent utility functions.
* We show NCGG is a potential game, and give an implementation of best/better
response Nash dynamics that lead to fast convergence to an
-approximate pure strategy Nash equilibrium.
* Lastly, we show the price of anarchy of NCGG can be as large as
(for any ), which means selfish behavior
in NCGG can lead to extremely inefficient social outcomes
A note on anti-coordination and social interactions
This note confirms a conjecture of [Bramoull\'{e}, Anti-coordination and
social interactions, Games and Economic Behavior, 58, 2007: 30-49]. The
problem, which we name the maximum independent cut problem, is a restricted
version of the MAX-CUT problem, requiring one side of the cut to be an
independent set. We show that the maximum independent cut problem does not
admit any polynomial time algorithm with approximation ratio better than
, where is the number of nodes, and arbitrarily
small, unless P=NP. For the rather special case where each node has a degree of
at most four, the problem is still MAXSNP-hard.Comment: 7 page
Public goods and decay in networks
We propose a simple behavioral model to analyze situations where (1) a group of agents repeatedly plays a public goods game within a network structure and (2) each agent only observes the past behavior of her neighbors, but is affected by the decisions of the whole group. The model assumes that agents are imperfect conditional cooperators, that they infer unobserved contributions assuming imperfect conditional cooperation by others, and that they have some degree of bounded rationality. We show that our model approximates quite accurately regularities derived from public goods game experiments
Incomplete Punishment Networks in Public Goods Games: Experimental Evidence
Abundant evidence suggests that high levels of contributions to public goods can be sustained through self-governed monitoring and sanctioning. This experimental study investigates the effectiveness of decentralized sanctioning institutions in alternative punishment networks. Our results show that the structure of punishment network significantly affects allocations to the public good. In addition, we observe that network configurations are more important than punishment capacities for the levels of public good provision, imposed sanctions and economic efficiency. Lastly, we show that targeted revenge is a major driver of anti-social punishment
Financial Structure and Economic Welfare: Applied General Equilibrium Development Economics
This review provides a common framework for researchers thinking about the next generation of micro-founded macro models of growth, inequality, and financial deepening, as well as direction for policy makers targeting microfinance programs to alleviate poverty. Topics include treatment of financial structure general equilibrium models: testing for as-if-complete markets or other financial underpinnings; examining dual-sector models with both a perfectly intermediated sector and a sector in financial autarky, as well as a second generation of these models that embeds information problems and other obstacles to trade; designing surveys to capture measures of income, investment/savings, and flow of funds; and aggregating individuals and households to the level of network, village, or national economy. The review concludes with new directions that overcome conceptual and computational limitations.National Science Foundation (U.S.)National Institutes of Health (U.S.)Templeton FoundationBill & Melinda Gates Foundatio
Methods to Identify Linear Network Models: A Review
In many contexts we may be interested in understanding whether direct connections between agents, such as declared friendships in a classroom or family links in a rural village, affect their outcomes. In this paper we review the literature studying econometric methods for the analysis of linear models of social effects, a class that includes the âlinear-in-meansâ local average model, the local aggregate model, and models where network statistics affect outcomes. We provide an overview of the underlying theoretical models, before discussing conditions for identification using observational and experimental/quasi-experimental data
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