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Journal of Economic Perspectives: Vol. 28 No. 4 (Fall 2014)
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Networks in the Understanding of Economic Behaviors
Article Citation
Jackson, Matthew O. 2014. "Networks in the Understanding of Economic Behaviors."
Journal of Economic Perspectives,
28(4): 3-22.
DOI: 10.1257/jep.28.4.3
DOI: 10.1257/jep.28.4.3
Abstract
As economists endeavor to build better models of human behavior, they cannot ignore that humans are fundamentally a social species with interaction patterns that shape their behaviors. People's opinions, which products they buy, whether they invest in education, become criminals, and so forth, are all influenced by friends and acquaintances. Ultimately, the full network of relationships—how dense it is, whether some groups are segregated, who sits in central positions—affects how information spreads and how people behave. Increased availability of data coupled with increased computing power allows us to analyze networks in economic settings in ways not previously possible. In this paper, I describe some of the ways in which networks are helping economists to model and understand behavior. I begin with an example that demonstrates the sorts of things that researchers can miss if they do not account for network patterns of interaction. Next I discuss a taxonomy of network properties and how they impact behaviors. Finally, I discuss the problem of developing tractable models of network formation.
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Authors
Jackson, Matthew O. (Stanford U and CIFAR, Toronto)
JEL Classifications
D11: Consumer Economics: Theory
D83: Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
D85: Network Formation and Analysis: Theory
Z13: Economic Sociology; Economic Anthropology; Social and Economic Stratification
D83: Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
D85: Network Formation and Analysis: Theory
Z13: Economic Sociology; Economic Anthropology; Social and Economic Stratification
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