Individual security, contagion, and network design

• 成果类型: Article
• 署名作者: Cerdeiro, Diego A.; Dziubinski, Marcin; Goyal, Sanjeev
• 署名单位: International Monetary Fund; University of Warsaw; University of Cambridge; University of Cambridge
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2017.05.006
• 发表日期: 2017
• 页码: 182-226
• 关键词: Network design; Individual security; inefficiencies; networks

摘要

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. (C) 2017 Elsevier Inc. All rights reserved.