Strategic Interaction and Networks-Reference-Cited by-同舟云学术

Strategic Interaction and Networks

Published:2014-03-01 Issue:3 Volume:104 Page:898-930
ISSN:0002-8282
Container-title:American Economic Review
language:en
Short-container-title:American Economic Review

Author:

Bramoullé Yann¹,Kranton Rachel²,D'Amours Martin³

Affiliation:

1. Aix-Marseille School of Economics, Aix-Marseille University, CNRS and EHESS, 2 rue de la Charité, 13002 Marseille, France, and Laval University, Department of Economics (e-mail: )

2. Department of Economics, Duke University, 213 Social Sciences Building, Durham, NC 27708 (e-mail: )

3. Department of Economics, Laval University, Pavillon DeSève, Québec G1V 0A6, Canada ()

Abstract

Geography and social links shape economic interactions. In industries, schools, and markets, the entire network determines outcomes. This paper analyzes a large class of games and obtains a striking result. Equilibria depend on a single network measure: the lowest eigenvalue. This paper is the first to uncover the importance of the lowest eigenvalue to economic and social outcomes. It captures how much the network amplifies agents' actions. The paper combines new tools—potential games, optimization, and spectral graph theory—to solve for all Nash and stable equilibria and applies the results to R&D, crime, and the econometrics of peer effects. (JEL C72, D83, D85, H41, K42, O33, Z13)

Publisher

American Economic Association

Subject

Economics and Econometrics

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/aer.104.3.898

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