The formation of networks with local spillovers and limited observability

• 成果类型: Article
• 署名作者: Koenig, Michael D.
• 署名单位: University of Zurich
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE1524
• 发表日期: 2016-09-01
• 页码: 813-863
• 关键词: diffusion; network formation; growing networks; limited observability

摘要

This paper analyzes the formation of networks in which each agent is assumed to possess some information of value to the other agents in the network. Agents derive payoff from having access to the information of others through communication or spillovers via the links between them. Linking decisions are based on network-dependent marginal payoff and a network-independent noise capturing exogenous idiosyncratic effects. Moreover, agents have a limited observation radius when deciding to whom to form a link. I find that for small noise the observation radius does not matter and strongly centralized networks emerge. However, for large noise, a smaller observation radius generates networks with a larger degree variance. These networks can also be shown to have larger aggregate payoff. I then estimate the model using a network of co-inventors and scientific collaborations in physics and economics, and find that the model can closely reproduce a variety of observed patterns. I show that local search is important in all the empirical networks conside, but that economists tend to search more broadly for new collaboration opportunities.