Networks: An Economic Perspective

Abstract

We discuss social network analysis from the perspective of economics. We organize the presentation around the theme of externalities: the effects that one's behavior has on others' welfare. Externalities underlie the interdependencies that make networks interesting to social scientists. We discuss network formation, as well as interactions between peoples' behaviors within a given network, and the implications in a variety of settings. Finally, we highlight some empirical challenges inherent in the statistical analysis of network-based data.

Keywords: economic networks, externalities, Game theory, network formation, network games, Networks, peer effects, Social Networks

JEL Classification: C72, D85, L14, Z13