040164 UK Networks: Theory and Applications (2012S)

The course will be split into two parts. The first part is a series of lectures on the analytic
modelling of networks and games played on networks. The second part is presentations by students of the selected papers (the list of topics will be discussed in class).
The first part of the course will begin with an overview of social and economic networks, and the embeddedness of economic activity. We then will examine how to describe and measure networks as well as empirical observations about network structure. Next, we will examine models of how networks form, including random network models and strategic formation models. Finally, we will take a long look at models of how networks impact behavior, including games played on network and networked markets.

The motivation for the course is the following. Network economics is a fast growing area of study, with a lot of potential for addressing a wide variety of socio-economic phenomena. Networks literally permeate our social and economic lives. The unemployed find jobs using the information and assistance of their friends and relatives. Consumers benefit from the research of friends and family into new products. In medicine and other technical fields, professional networks shape research patterns. Networks are important in determining how diseases spread, which languages we speak, how we vote, as well as whether or not we decide to become criminals, how much education we obtain, and our likelihood of succeeding professionally. The countless ways in which network structures affect our well-being make it critical to understand: (i) how network structures impact behavior, (ii) which network structures are likely to emerge in a society, and (iii) what can be done, in the way of design by policymakers, to improve systemic outcomes. This course provides an overview and synthesis of research on social and economic networks, drawing on studies by sociologists, economists, computer scientists, physicists, and mathematicians.

The course will require some basic prerequisites in mathematics, statistics and game theory. For example, it will be assumed that students are comfortable with basic concepts from linear algebra and probability theory, as well as with standard concepts and assumptions from game theory (rationality, pure and mixed strategies, simultaneous and sequential games, repeated games, Nash equilibrium, subgame perfection). Beyond those concepts, the course will be selfcontained.

In order to pass the course successfully students will be required to complete two assignments. The first assignment is to prepare literature review for the selected area of research in social and economic networks (possible topics/areas of research will be mostly based on the material of the lectures and will be specifically discussed in class). The second assignment is to present in class one of the papers in this area (from your literature review), which you find particularly interesting and/or influential, with the detailed overview of the model, assumptions used, results, examples and possible policy implications.