We present a simple model of a production network in which firms are linked by supplier–customer relationships involving extension of trade–credit. Our aim is to identify the minimal set of mechanisms which reproduce qualitatively the main stylized facts of industrial demography, such as firms’ size distribution, and, at the same time, the correlation, over time and across firms, of output, gro...

In contexts ranging from public goods provision to information collection, a player’s well-being depends on own action as well as on the actions taken by his or her neighbors. We provide a framework to analyze such strategic interactions when neighborhood structure, modeled in terms of an underlying network of connections, affects payoffs. In our framework, individuals are partially informed ab...

Pairwise stability Jackson and Wolinsky [1996] is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are perfectly farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these extreme theories,...

This paper establishes a relationship between the observability of common shocks and optimal organizational design under a multiagent moral hazard environment. The choices of organization and investment on information about common shocks are determined jointly, in a Walrasian equilibrium model where the commodities traded are memberships in organizations. Numerical results reveal that both coop...

We study the effect of offering index insurance to groups versus individuals on individual’s savings and insurance decisions in a lab experiment in the field, which offers real index insurance. We also look at how the network relationships among dairy farmers in the Dominican Republics affects the demand for group index insurance. Individuals offered group insurance are exogenously grouped acco...

We retraced the development of the network of those who participated in the 9/11 attacks through four stages: 1998-99, December 2000, May 2001 and August 2001. We established that throughout its development, the network had the characteristics of a small world. The implications of this result pointed towards an easily detectable but difficult to dismantle network due to its large clusters. We t...

We develop a modification of the connections model by Jackson and Wolinsky (1996) that takes into account negative externalities arising from the connectivity of direct and indirect neighbors. Our model combines then different aspects of the connections model and the co-author model and can be seen as a degree and distance-based model with both negative and positive externalities. Consider a si...

I postulate that social norms and individuals’ behaviors are shaped by a common process capable of generating a multitude of outcomes. In games of friendship links and behaviors, I propose k-player Nash stability—a family of equilibria, indexed by a measure of robustness given by the number of permitted link changes, which is (ordinally and cardinally) ranked in a probabilistic sense. Applicati...

Existing theories of coups against democracy emphasize that elites mount coups when democracy is particularly threatening to their interests. But holding interests constant, some potential plotters may have more influence over whether or not a coup succeeds. We develop a model where coups generate rents for elites and show that the likelihood of elite participation is increasing in their networ...