Related papers: Contagious Synchronization and Endogenous Network …
Digital banking and online communication have made modern bank runs faster and more networked than the canonical queue-at-the-branch setting. While equilibrium models explain why strategic complementarities generate run risk, they offer…
In the context of micro-finance, a group of individuals undertake business projects that may interfere with one another. A contagious default happens if one person's project failure leads to the default of another group member. In this…
The 2008 financial crisis exposed fundamental vulnerabilities in interconnected banking systems, yet existing frameworks fail to integrate spatial propagation with network contagion mechanisms. This paper develops a unified spatial-network…
Employee turnover is a critical challenge in financial markets, yet little is known about the role of professional networks in shaping career moves. Using the Hong Kong Securities and Futures Commission (SFC) public register (2007-2024), we…
The DebtRank algorithm has been increasingly investigated as a method to estimate the impact of shocks in financial networks, as it overcomes the limitations of the traditional default-cascade approaches. Here we formulate a dynamical…
The negative externalities from an individual bank failure to the whole system can be huge. One of the key purposes of bank regulation is to internalize the social costs of potential bank failures via capital charges. This study proposes a…
Contagion, a concept from epidemiology, has long been used to characterize social influence on people's behavior and affective (emotional) states. While it has revealed many useful insights, it is not clear whether the contagion metaphor is…
Complex networks represent the natural backbone to study epidemic processes in populations of interacting individuals. Such a modeling framework, however, is naturally limited to pairwise interactions, making it less suitable to properly…
We model a network economy with three sectors: downstream firms, upstream firms, and banks. Agents are linked by productive and credit relationships so that the behavior of one agent influences the behavior of the others through network…
Humans have developed considerable machinery used at scale to create policies and to distribute incentives, yet we are forever seeking ways in which to improve upon these, our institutions. Especially when funding is limited, it is…
Realistic credit risk assessment, the estimation of losses from counterparty's failure, is central for the financial stability. Credit risk models focus on the financial conditions of borrowers and only marginally consider other risks from…
The threshold model has been widely adopted as a classic model for studying contagion processes on social networks. We consider asymmetric individual interactions in social networks and introduce a persuasion mechanism into the threshold…
Contagion processes are strongly linked to the network structures on which they propagate, and learning these structures is essential for understanding and intervention on complex network processes such as epidemics and (mis)information…
When studying social, economic and biological systems, one has often access to only limited information about the structure of the underlying networks. An example of paramount importance is provided by financial systems: information on the…
We examine behavior in an experimental collaboration game that incorporates endogenous network formation. The environment is modeled as a generalization of the voluntary contributions mechanism. By varying the information structure in a…
Consider a Bayesian binary decision-making problem in star networks, where local agents make selfish decisions independently, and a fusion agent makes a final decision based on aggregated decisions and its own private signal. In particular,…
We develop a unified model in which AI adoption in financial markets generates systemic risk through three mutually reinforcing channels: performative prediction, algorithmic herding, and cognitive dependency. Within an extended rational…
In this work we present a strategic network formation model predicting the emergence of multigroup structures. Individuals decide to form or remove links based on the benefits and costs those connections carry; we focus on bilateral consent…
As problems in political polarization and the spread of misinformation become serious, belief propagation on a social network becomes an important question to explore. Previous breakthroughs have been made in algorithmic approaches to…
We develop an agent-based model of strategic link formation in Research and Development (R&D) networks. Empirical evidence has shown that the growth of these networks is driven by mechanisms which are both endogenous to the system (that is,…