Why do we need models?
- Provide insight into why we see certain phenomena:
- Why do social networks have short average path lengths?
- Allow for comparative statics:
- How does component structure change with density? Important in contagion/diffusion/learning...
- Predict out of sample:
- What will happen with a new policy (vaccine, R&D subsidy, ...)?
- Allow for statistical estimation:
- Is there significant clustering on a local level or did it appear at random?
"Social" networks have special characteristics
- small worlds, degree distributions
Embeddedness of Economic Activity
- Few markets are centralized, anonymous
- Specific relationships matter...
Other Settings
Networks and social interactions in crime
Networks and Markets
Social Insurance
Diffusion
Sociology literature