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Contagion in networks: Stability and efficiency

Bougheas, Spiros

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Abstract

We study the formation of networks in environments where agents derive benefits from their neighbours (immediate links) but suffer losses through contagion when any agent on a path that connects them is hit by a shock. We first consider networks with undirected links (e.g. epidemics, underground resistance organizations, trade networks). We find that the only networks that satisfy strong notions of stability are comprised of disjoint subgraphs that are complete. Then, we consider networks with directed links and we find that stable networks can be asymmetric, connected but not completely connected, thus capturing the main features of production and financial networks. We also identify a trade-off between efficiency and stability.

Citation

Bougheas, S. (2022). Contagion in networks: Stability and efficiency. Mathematical Social Sciences, 115, 64-77. https://doi.org/10.1016/j.mathsocsci.2021.10.006

Journal Article Type Article
Acceptance Date Oct 24, 2021
Online Publication Date Nov 3, 2021
Publication Date Jan 1, 2022
Deposit Date Oct 25, 2021
Publicly Available Date May 4, 2023
Journal Mathematical Social Sciences
Print ISSN 0165-4896
Electronic ISSN 1879-3118
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 115
Pages 64-77
DOI https://doi.org/10.1016/j.mathsocsci.2021.10.006
Keywords Statistics, Probability and Uncertainty; General Psychology; General Social Sciences; Sociology and Political Science
Public URL https://nottingham-repository.worktribe.com/output/6536540
Publisher URL https://www.sciencedirect.com/science/article/abs/pii/S0165489621001086?via%3Dihub
Additional Information This article is maintained by: Elsevier; Article Title: Contagion in networks: Stability and efficiency; Journal Title: Mathematical Social Sciences; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.mathsocsci.2021.10.006

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