CAREER:Strategic behavior, beliefs, and interventions in networks

This CAREER award funds research in the economic theory of networks. Network theory is used to analyze applications ranging from economic development to business management. This project will develop new models and new measures of network structure that are tailored to particular outcomes of interest.

The first project looks at how individuals learn from others, and asks what kinds of networks spread accurate information. The second project examines how businesses that share a supply chain make strategic decisions about pricing. The third project considers the economics of network coordination.

When individuals seek to match their actions or opinions to those held by their friends and neighbors, what properties of the group determine whether or not disagreement will persist? The fourth project studies the formation of networks for collaboration. The model gives new implications for how to build successful teams from diverse populations.

This project includes experiments with students who will collaborate to learn new skills. The experiments are designed to measure key model parameters. The education component of this award uses the experiments as a platform for student engagement with recent research in this growing research field.

The proposal covers several of the major areas of the economic theory of networks: learning and information transmission, games and markets embedded in networks, and network formation. The first project analyzes a new model of rational individuals learning from their social contacts. It asks what network structures allow agents to form accurate beliefs about a changing world, and which ones lead to persistent errors.

The second project studies a pricing problem in which firms interact strategically because they are part of the same supply chain and their prices affect each other's markets. The PI takes a network perspective on the strategic relationships and analyzes interventions in the market aimed, for example, at improving consumer welfare. The third project considers the basic welfare economics of network coordination.

When individuals seek to match their actions or opinions to those of their network contacts, what properties of the group?s preferences determine the costs of miscoordination or disagreement? Which networks sustain strong polarization? The fourth project studies the formation of networks for collaboration, e.g. by students in school.

Since the topics of the projects have proved to be of interest to applied researchers, the theoretical advances should have spillover benefits to other parts of economics. In several of the projects, a key aim is to provide empirically relevant summary statistics (e.g., measures of price pass-through, or segregation) for use in applied research. Finally,because the projects make connections with some classical problems of Bayesian learning, market power, and coordination games, they also aim to enrich economic theory more broadly.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.