In this paper we present a methodology of model-based calibration additional capital needed in an interconnected financial system to minimize potential contagion losses. Building on ideas from combinatorial optimization tailored controlling case complete information about interbank network, augment the model with three plausible types fire sale mechanisms. We then demonstrate power euro area ba...

We develop a theory of ‘behavioral communities’ and the ‘atomic structure’ of networks. We define atoms to be groups of agents whose behaviors always match each other in a set of coordination games played on the network. This provides a microfoundation for a method of detecting communities in social and economic networks. We provide theoretical results characterizing such behavior-based communi...

This paper offers a tractable and fully rational model to study the economics of reputation in a dynamic market with limited record-keeping, i.e., a market in which new entrants observe only the last few periods of play of the long-run player instead of the full history of the market. We show that trust is gradually granted to the opportunistic longrun player despite the fact that his type is p...

The nature of competition is quite different in network industries as compared to the other, more traditional, ones. The purpose of the present paper is to thoroughly examine the implications of these differences as reflected in the dependence of equilibrium outputs, price and profits on industry concentration. We restrict the analysis to oligopolistic competition amongst firms in a market char...

This paper studies the provision of incentives in a large U.S. training organization which is divided in about 50 independent pools of training agencies. The number and the size of the agencies within each pool vary greatly. Each pool distributes performance incentive awards to the training agencies it supervises, subject to two constraints: the awards cannot be negative and the sum of the awar...

In this paper a model for the formation of strategic alliances is studied. Innovation results from the recombination of knowledge held by the partners to the collaboration, and from the history of their collaboration. Innovation brings partners closer together, while at the same time the repetition of partnerships fosters trust and helps improving the outcome of each round of cooperation. A ten...

It has been previously shown that ribosomal protein synthesis in Escherichia coli is regulated at the level of translation by certain key ribosomal proteins. In the spc operon, S8 regulates the expression of L5 and some of the subsequent genes, while the first two genes (L14 and L24) are regulated independently. We therefore determined the DNA sequence at the junction of the L24 and L5 genes, w...

We study the problem of spreading a particular behavior among agents located in a random social network. In each period of time, neighboring agents interact strategically playing a 2 × 2 coordination game. Assuming a myopic-best response dynamics, we show that there exists a threshold for the degree of risk dominance of an action such that below that threshold, contagion of the action occurs. T...

This paper looks at the outsourcing of research and development (R&D) activities. We consider cost reducing R&D and allow manufacturing firms to decide whether to outsource the project to research subcontractors or carry out the research in-house. We use a principal-agent framework and consider fixed and revenue-sharing contracts. We solve for the optimal contract under these constraints. We fi...

Although an increasing number of studies of technological, institutional and organizational change refer to the concepts of path dependence and path creation, few attempts have been made to consider these concepts explicitly in their methodological accounts. This paper addresses this gap and contributes to the literature by developing a comprehensive methodology that originates from the concept...