Next Economic Analysis Seminar Series

El próximo martes 10 de diciembre tendremos un seminario impartido por Piero Gotardi (University of Essex) con el título "Network formation and heterogeneous risks". El seminario tendrá lugar a las 2:00 en la Sala de Juntas del Edificio 3.

Título: "Network formation and heterogeneous risks" 

Coautor: Antonio Cabrales

 
Resumen: We introduce a novel model of networks with multi-level interactions. The first level features linkages that benefit both directly and indirectly connected agents, while the second involves linkages that benefit only direct connections but harm indirect ones. This framework has broad applications, including financial networks with banks and borrowing firms, production networks with sustainable and polluting firms, and social networks where interactions affect disease spread. We characterize the socially efficient network, in which banks form large connected components with few borrowers. In contrast, the equilibrium network features more borrowers per bank and smaller bank components. These externalities between interaction levels open the door for significant policy interventions. We also analyze heterogeneity and information asymmetries among agents and show they both amplify the negative effects of these externalities.