The Gestalt in Graphs: Prediction Using Economic Networks

26 Pages Posted: 9 Nov 2009 Last revised: 8 Feb 2010

See all articles by Vasant Dhar

Vasant Dhar

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

Gal Oestreicher-Singer

Tel Aviv University - Coller School of Management

Arun Sundararajan

New York University (NYU): Stern School of Business and Center for Data Science

Akhmed Umyarov

New York University (NYU) - Leonard N. Stern School of Business

Date Written: February 7, 2010

Abstract

We define an economic network as a linked set of entities, where links are created by actual realizations of shared economic outcomes between entities. Such aggregations, which include a wide variety of Web-based product networks, are becoming increasingly available for business use. We analyze the predictive information contained in such networks using the copurchase network on Amazon where entities are books and links designate which pairs were purchased simultaneously. Our dataset covers a diverse set of books spanning over 400 categories over a period of three years with a total of over 70 million observations. We demonstrate that an entity’s future demand is more accurately predicted by combining its historical demand with that of its neighbors than by considering its demand alone. In other words, if you want to know what your state will be in the future, consider what is happening to your neighbors now. This result could apply to other economic networks where outcomes of sets of entities tend to be related and suggest substantial potential for real-time decision support systems that leverage such networks. To our knowledge, this is the first large scale study showing that an economic network contains useful distributed information for demand prediction.

Keywords: network effects, economic networks, copurchase networks, predictive models, data mining

Suggested Citation

Dhar, Vasant and Oestreicher-Singer, Gal and Sundararajan, Arun and Umyarov, Akhmed, The Gestalt in Graphs: Prediction Using Economic Networks (February 7, 2010). NYU Working Paper No. CEDER-09-06. Available at SSRN: https://ssrn.com/abstract=1500834

Vasant Dhar (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

HOME PAGE: http://www.stern.nyu.edu/~vdhar

New York University (NYU) - Department of Information, Operations, and Management Sciences

44 West Fourth Street
New York, NY 10012
United States

Gal Oestreicher-Singer

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

Arun Sundararajan

New York University (NYU): Stern School of Business and Center for Data Science ( email )

44 West 4th Street, KMC 8-90
New York, NY 10012
United States

HOME PAGE: http://digitalarun.ai/

Akhmed Umyarov

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
211
rank
141,084
Abstract Views
1,611
PlumX Metrics