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I'm working on my master's thesis in industrial organization and I have a model that is based on social networks. I have had two courses about social networks (one more focused on basic industrial organization questions in networks and the other more about basic graph theory) but as I work more on the model I feel I'm not really using the network in solving the questions that arise and leaving it more as a descriptive structure, and I fear it is mostly due to ignorance.

Can anyone refer to a good book, class notes or papers that might help me learn more deeply the implications of the network structure and/or the pros and cons of modeling a problem as a network? For example on how the network structure might be helpful when trying to determine existence of equilibrium.

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2 Answers 2

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The best introduction is, in my opinion, the book by Matthew Jackson. It has a pretty nice introduction (even if you know nothing about social networks) and chapters about many of the applications of graph theory in economics.

  • Jackson, M. O. (2008). Social and economic networks (Vol. 3). Princeton: Princeton University Press.

It sounds like you try to model a game on a network (i.e., using game theory with players on a network without changing the network). If this is true, then the following paper might be even more relevant:

  • Galeotti, A., Goyal, S., Jackson, M. O., Vega-Redondo, F., & Yariv, L. (2010). Network games. The review of economic studies, 77(1), 218-244.
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  • $\begingroup$ Awesome. I heard about Jackson's book before but got mixed opinions about it. The paper is definitely in line with what I'm doing. Thanks! $\endgroup$
    – BVJ
    Apr 16, 2015 at 14:59
  • $\begingroup$ @BVJ Happy to help. I think mixed opinions is pretty common if a book tries to cover a whole subfield (like the Mas-Colell or, to a lesser extend, the book by Jackson). I actually like the book by Goyal better, but I don't think it is a good introductory book at all. $\endgroup$
    – The Almighty Bob
    Apr 16, 2015 at 17:00
  • $\begingroup$ The draft of Jackson's book circulated around for a while. Worth looking at before buying the book. $\endgroup$
    – Anton Tarasenko
    Apr 17, 2015 at 15:20
  • $\begingroup$ @Anton or have a look at the copy in your university library. :-) $\endgroup$
    – The Almighty Bob
    Apr 17, 2015 at 15:29
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Networks: An Introduction by Mark Newman is a good book.

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  • $\begingroup$ Thanks! it seems quite general though. I looked at the content list and I think I have a working knowledge of most of the economically-relevant topics of it. I'm looking hopefully for something more microeconomic oriented, as in economic equilibriums in networks or mechanism design in networks. $\endgroup$
    – BVJ
    Apr 16, 2015 at 14:40

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