On Social and Economic Networks

You can call it a clan, or a network, or a family, or a group of friends. The way you call it is not relevant. What matters is that it exists and often you will need one. A large body of empirical work shows that networks are pervasive in social and economic interactions. This book contains four essays on the economics of networks, using a non-cooperative game theoretical approach. The first two essays study what are the structural properties of social networks when heterogeneous individuals have the discretion to form social ties. The last two essays analyse how networks influence the strategic decision making of individuals in games of conflict and in market-regulated settings. I argue that networks are likely to exhibit very central structure and short distances across individuals. Furthermore, the presence of networks alters the incentives of individual players, sometimes creating inefficient outcomes.

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