Related papers: Contagious Synchronization and Endogenous Network …
The Internet is a loose amalgamation of independent service providers acting in their own self-interest. We examine the implications of this economic reality on peering relationships. Specifically, we consider how the incentives of the…
Social behaviors are often contagious, spreading through a population as individuals imitate the decisions and choices of others. A variety of global phenomena, from innovation adoption to the emergence of social norms and political…
In this brief review, we critically examine the recent work done on correlation-based networks in financial systems. The structure of empirical correlation matrices constructed from the financial market data changes as the individual stock…
We study an endogenous opinion (or, belief) dynamics model where we endogenize the social network that models the link (`trust') weights between agents. Our network adjustment mechanism is simple: an agent increases her weight for another…
Financial networks are typically estimated by applying standard time series analyses to price-based economic variables collected at low-frequency (e.g., daily or monthly stock returns or realized volatility). These networks are used for…
The recent financial crisis have generated renewed interests in fragilities of global financial networks among economists and regulatory authorities. In particular, a potential vulnerability of the financial networks is the "financial…
We analyse the importance of international relations between countries on the financial stability. The contagion effect in the network is tested by implementing an epidemiological model, comprising a number of European countries and using…
We discuss the systemic risk implied by the interbank exposures reconstructed with the maximum entropy method. The maximum entropy method severely underestimates the risk of interbank contagion by assuming a fully connected network, while…
Infectious diseases are studied to understand their spreading mechanisms, to evaluate control strategies and to predict the risk and course of future outbreaks. Because people only interact with a small number of individuals, and because…
We study network games in which players choose both the partners with whom they associate and an action level (e.g., effort) that creates spillovers for those partners. We introduce a framework and two solution concepts, extending standard…
In this study, I present a theoretical social learning model to investigate how confirmation bias affects opinions when agents exchange information over a social network. Hence, besides exchanging opinions with friends, agents observe a…
The spread of new ideas, behaviors or technologies has been extensively studied using epidemic models. Here we consider a model of diffusion where the individuals' behavior is the result of a strategic choice. We study a simple coordination…
Many network contagion processes are inherently multiplex in nature, yet are often reduced to processes on uniplex networks in analytic practice. We therefore examine how data modeling choices can affect the predictions of contagion…
We consider processes on social networks that can potentially involve three factors: homophily, or the formation of social ties due to matching individual traits; social contagion, also known as social influence; and the causal effect of an…
The instability of financial system issues might trigger a bank failure, evoke spillovers, and generate contagion effects which negatively impacted the financial system, ultimately on the economy. This phenomenon is the result of the highly…
We propose a new model of the liquidity driven banking system focusing on overnight interbank loans. This significant branch of the interbank market is commonly neglected in the banking system modeling and systemic risk analysis. We…
Many link formation mechanisms for the evolution of social networks have been successful to reproduce various empirical findings in social networks. However, they have largely ignored the fact that individuals make decisions on whether to…
This paper suggests that business cycles may be a manifestation of coupled real economy and stock market dynamics and describes a mechanism that can generate economic fluctuations consistent with observed business cycles. To this end, we…
We analyze cascades of defaults in an interbank loan market. The novel feature of this study is that the network structure and the size distribution of banks are derived from empirical data. We find that the ability of a defaulted…
The interbank market is considered one of the most important channels of contagion. Its network representation, where banks and claims/obligations are represented by nodes and links (respectively), has received a lot of attention in the…