Homophily, the tendency of people to associate with others similar to themselves, is observed in many social networks, ranging from friendships to marriages to business relationships, and is based on a variety of characteristics, including race, age, gender, religion, and education. We present a technique for distinguishing two primary sources of homophily:… (More)
We model network formation when heterogeneous nodes enter sequentially and form connections through both random meetings and network-based search, but with type-dependent biases. We show that there is " long-run integration, " whereby the composition of types in sufficiently old nodes' neighborhoods approaches the global type distribution, provided that the… (More)
The very notion of social network implies that linked individuals interact repeatedly with each other. This notion allows them not only to learn successful strategies and adapt to them, but also to condition their own behavior on the behavior of others, in a strategic forward looking manner. Game theory of repeated games shows that these circumstances are… (More)
This is a chapter of the forthcoming Oxford Handbook on the Economics of Networks.
We propose a model of price competition where consumers exogenously differ in the number of prices they compare. Our model can be interpreted either as a non–sequential search model or as a network model of price competition. We show that i) if consumers who previously just sampled one firm start to compare more prices all types of consumers will expect to… (More)
We show that the introduction of Tobin taxes in agent-based models of currency markets can lead to a reduction of both speculative trading and the magnitude of exchange rate fluctuations at intermediate tax rates. In this regime revenues obtained from speculators are maximal for the institutions acting as market makers. We here focus on minority game models… (More)
The best shot game applied to networks is a discrete model of many processes of contribution to local public goods. It generally has a wide multiplicity of equilibria that we refine through stochastic stability. We show that, depending on how we define perturbations – i.e., possible mistakes that agents make – we can obtain very different sets of… (More)
We propose a new method for aggregating the information of multiple users rating multiple items. Our approach is based on the network relations induced between items by the rating activity of the users. Our method correlates better than the simple average with respect to the original rankings of the users, and besides, it is computationally more efficient… (More)