Markets and Networks
Start date: Mar 1, 2014,
End date: Feb 28, 2019
Economists are becoming increasingly aware of the importance and ubiquity of social networks. The economics of social networks constitutes one of the most active areas of research in economics. Despite much progress, however, our understanding of the relationships between markets and networks is still poor and fragmentary. This project will advance the state of the art by analyzing the relations between markets and networks in two domains.I will first study theoretically the interaction between formal insurance and networks of informal insurance. I will analyze how the position in a risk-sharing network affects the incentives to adopt formal insurance, how network structure affects overall adoption, how formal insurance could benefit from network monitoring on efforts and whether the adoption of formal insurance strengthen or weaken the risk-sharing network. Second, I will study theoretically the impact of networks on markets with search frictions. I will derive the full-fledged equilibrium implications of network-based search in matching models of the labor market. I will also introduce recall in a finite-horizon matching model and study the impact of the emerging network of trading partners.
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