Resource availability in the social cloud: An economics perspective

Social cloud has emerged as a case of sharing economy, where socially connected agents share their computing resources within the community. This paper considers the social cloud as an endogenous resource-sharing network, where agents are involved in closeness-based conditional resource sharing. This study focuses on (1) the impact of agents' decisions of link addition and deletion on their own local and global resource availability as well as on others' global resource availability (as spillover effects), (2) the role of agents' closeness in determining spillover effects, (3) agents' link addition behavior, and (4) stability and efficiency of the social cloud. The findings include the following: (i) Agents' decision of link addition (deletion) increases (decreases) their local resource availability. However, these observations do not hold in the case of global resource availability. (ii) In a connected network, agents experience either a positive or a negative spillover effect and there is no case with no spillover effects. Agents observe no spillover effects if and only if the network is disconnected with three or more components. Furthermore, an agent experiences negative spillover if there is no change in its closeness. Although an increase in the closeness of agents is necessary to experience positive spillover effects, the condition is not sufficient. (iii) We study the relation between agents' distance from each other, and their local as well as global resource availabilities. We prove that the local resource availability of an agent from another agent increases with decrease in the distance between them and that maximum local resource availability is obtained from the agent with the least closeness. Using these results, we discuss which agent to add a link to, so as to maximize the local resource availability. We discuss why such results are difficult to establish for global resource availability. However, in a two-diameter network, we show that for an agent, link formation always increases the global resource availability. (iv) We also study resource-sharing network formation and its efficiency in a strategic setting. We prove the existence of a pairwise stable network. Furthermore, we provide a set of conditions for a few prominent network structures (star, complete, wheel, and bipartite networks) to be pairwise stable. We show that the “connected in pairs, otherwise disconnected” network is better than a connected network, in terms of social welfare.     

Optimal Nonlinear Income Taxation with Habit Formation

It has recently been shown that incorporating “keeping up with the Joneses” preferences into a prototypical two‐ability‐type optimal nonlinear income tax model leads to higher marginal tax rates for both types of agents. In particular, the high‐skill type faces a positive marginal tax rate, rather than zero as in the conventional case. In this paper, agents’ utility functions are postulated to exhibit “habit formation in consumption” such that the prototypical two‐ability‐type optimal nonlinear income tax model becomes a dynamic analytical framework. We show that if the government can commit to its future fiscal policy, the presence of consumption habits does not affect the standard results on optimal marginal tax rates. By contrast, if the government cannot precommit, the high‐skill type will face a negative marginal tax rate, while the low‐skill type’s marginal tax rate remains positive.     

Coordination in evolving networks with endogenous decay

This paper studies an evolutionary model of network formation with endogenous decay, in which agents benefit both from direct and indirect connections. In addition to forming (costly) links, agents choose actions for a coordination game that determines the level of decay of each link. We address the issues of coordination (long-run equilibrium selection) and network formation by means of stochastic stability techniques. We find that the long-run behavior of the system depends on a fine interplay of the link cost and the trade-off between efficiency and risk-dominance.     

Should a team be homogeneous?

Should an organization hire people with similar backgrounds or with different backgrounds? We formulate this question within the framework of team theory. The team is formed by n agents. The type of each agent is endogenous and determines his information structure and his cost for the team. We show that the sign of complementarity between jobs determines workforce homogeneity. With positive complementarities, the team should be composed of agents of the same type, while, with negative complementarities, workforce heterogeneity is optimal. These results do not rely on the restrictions on the way uncertainty is modeled or on the feasible set of agent types: they can be explained in terms of correlation between errors committed by different agents.     

Identity,Utility, and Cooperative Behaviour: An Evolutionary Perspective*†

This paper provides an argument for the advantage of a preference for identity‐consistent behaviour from an evolutionary point of view. Within a stylized model of social interaction, it is shown that the development of cooperative social norms is greatly facilitated if the agents possess a preference for identity‐consistent behaviour. As compliance with cooperative norms (in the long run) has a positive effect on the agents’ pay‐offs, it is argued that such a preference is evolutionarily advantageous. Notably, the argument, which assumes that agents always act in accordance with their preferences, also accounts for the cost of those features that are crucial for the selection process.     

CRIME AND POVERTY: A SEARCH‐THEORETIC APPROACH*

Numerous studies document that criminal activity is positively related to unemployment and negatively related to educational attainment levels within given communities. We study this phenomenon in the context of a search‐equilibrium model, in which agents choose between formal employment and pursuing crime‐related activities (theft). Prior to their “occupational choices,” agents undertake costly schooling, raising their productivity. Crime acts, in essence, as a tax on human capital by affecting the probability that a worker's earnings (possessions) are subsequently appropriated. There are multiple equilibria. High crime, low levels of educational attainment, long spells of unemployment, and poverty are correlated across them.     

Neutral agents and social tolerance: a dynamic perspective based on economic interaction model with local social cost functions

The influence of neutral agents on the evolutionary dynamics of social tolerance is discussed based on a recently proposed economic interaction model with local social cost functions. We show that the dynamical structure of social tolerance is completely changed even if a few neutral agents are introduced into the society. Especially, the full intolerance steady state, which is stable in previous works, becomes unstable and avoidable due to the economic incentive introduced by the neutral agents. The necessary condition of achieving full tolerance is also reduced compared to previous works without neutral agents.     

中关村高新技术企业合作申请专利网络集聚效应分析

根据中关村管委会提供的“一区十六园”和11个技术领域合作申请专利数据,构建高新技术企业合作申请专利网络。以模块度作为描述性指标,采用Louvain聚合算法分析社团结构特征及演化趋势。最后,具体分析4个时间截面的五大社团结构,从而揭示网络社团结构对企业合作申请专利的推动作用。     

NEGATIVE INTRA‐GROUP EXTERNALITIES IN TWO‐SIDED MARKETS*

Two types of agents interact on a pre‐existing free platform. Agents value positively the presence of agents of the other type but may value negatively the presence of agents of their own type. We ask whether a new platform can find fees and subsidies so as to divert agents from the existing platform and make a profit. We show that this might be impossible if intra‐group negative externalities are sufficiently (but not too) strong with respect to positive inter‐group externalities.     

Organizational Cultures of Corruption

Systematic differences in the incidence of corruption between countries can be explained by models of coordination failure that suggest that corruption can only be reduced by a “big push” across an entire economy. However, there is significant evidence that corruption is often sustained as an organizational culture, and can be combated with targeted effort in individual organizations one at a time. In this paper, we propose a model that reconciles these two theories of corruption. We explore a model of corruption with two principal elements. First, agents suffer a moral cost if their corruption behavior diverges from the level they perceive to be the social norm; second, the perception of the norm is imperfect; it gives more weight to the behavior of colleagues with whom the agent interacts regularly. This leads to the possibility that different organizations within the same country may stabilize at widely different levels of corruption. Furthermore, the level of corruption in an organization is persistent, implying that some organizations may have established internal “cultures” of corruption. The organizational foci are determined primarily by the opportunities and (moral) costs of corruption. Depending on the values of these parameters, the degree of corruption across departments may be relatively uniform or widely dispersed. These results also explain another surprising empirical observation: that in different countries similar government departments such as tax and education rank very differently relative to each other in the extent to which they are corrupt. This is difficult to explain in incentive‐based models if similar departments face similar incentives in different countries.     

Consumer confusion,obfuscation and price regulation

This paper studies firms’ obfuscation choices in a duopoly setting where two firms differ in their marginal costs of production. We show that the high‐cost firm chooses maximum obfuscation while the low‐cost firm chooses minimal (maximal) obfuscation if the cost advantage is large (small). We argue that in this setting there is a new role for price regulation as it leads to more transparent pricing. Moreover, a price cap benefits social welfare as it shifts production to the more efficient low‐cost firm.     

Barriers to network-specific investment

We examine incentives for network-specific investment and consider the implications for network governance. We model a two-sided market in which participants making payments over a network platform can invest in a technology that reduces the marginal cost of using the platform. A network effect results in multiple equilibria—either all agents invest and use of the platform is high or no agents invest and use of the platform is low. The high-use equilibrium can be implemented if commitment is feasible. When the platform cannot commit to usage fees, investment in the platform-specific technology will be held up, thus implementing the low-investment equilibrium. As a result, governance structures necessary to achieve commitment will be preferred to those necessary merely to achieve coordination. For example, mutual ownership by users of a network platform may emerge where users face risk of ex post renegotiation. Such a governance structure will also be sufficient to avoid low investment attributable to the network effect.     

Should Mobile Marketers Collect Data Other Than Geo‐Location?*

We take today's mobile marketing data landscape as a starting point and consider a duopoly model of third‐degree price discrimination in which firms can complement geo‐location information with data on consumer flexibility of varying quality. We show that, depending on consumer heterogeneity, higher‐quality flexibility data affect profits according to three different patterns. In equilibrium, both firms tend to acquire data if the data are of high quality, while only one acquires data if the data quality is low. Firms are likely to gain from additional data if consumers have similar preferences and/or when data are precise. Although social welfare (weakly) improves, consumers can be harmed.     

Formation of Migrant Networks

In this paper, we provide the first direct evidence on the internal structure of the migrant social network. By using a purposely designed survey on Sri Lankan immigrants living in Milan, we show that the pattern of within‐group link formation is heterogeneous across immigrants, and differentiated according to the network function (i.e., accommodation, credit, job‐finding). We find that migrants tend to interact with co‐nationals who come from nearby localities at origin, while the time of arrival has a U‐shaped effect. Once the link is formed, material support is provided mainly to relatives, while early migrant fellows are helpful for job‐finding.     

Warm glow and the transmission of pro‐socialness across generations

The transmission of pro‐socialness across generations is modeled using the warm‐glow approach. The parent generation seeks to cultivate pro‐social values in their children as this would improve their material well‐being when they grow up as cooperative adults. I show that communities endowed with more productive resources have a stronger incentive to teach their children social cooperation. Thus, there is a correlation between a village's level of material well‐being and villagers’ steady‐state level of pro‐socialness. When the cost of moral education is directly dependent on the parent generation's level of pro‐socialness, the multiplicity of steady states may emerge. If a community's initial level of pro‐socialness is high, the system will reach an interior steady state; in contrast, if this initial level is low, eventually the level of pro‐socialness will approach zero in the long run. Thus communities that start with similar initial levels of pro‐socialness may end up at drastically different steady states.     

Information-sharing in social networks

We present a new model for reasoning about the way information is shared among friends in a social network and the resulting ways in which the social network fragments. Our model formalizes the intuition that revealing personal information in social settings involves a trade-off between the benefits of sharing information with friends, and the risks that additional gossiping will propagate it to someone with whom one is not on friendly terms but who is within oneʼs community. We study the behavior of rational agents in such a situation, and we characterize the existence and computability of stable information-sharing configurations, in which agents do not have an incentive to change the set of partners with whom they share information. We analyze the implications of these stable configurations for social welfare and the resulting fragmentation of the social network.     

A NOTE ON SELECTION EFFECTS OF THE HAND RULE

The famous Hand rule weighs the burden of precaution against the reduction in expected harm. The burden may be type‐specific, implying different standards of care for different injurer types. We show that this fact may be exploited by principals in their search for minimized individual costs. Principals may hire agents with high cost of care‐taking although other agents are available. This is shown in a unilateral‐care setting either with perfect or with asymmetric information. We therefore highlight a neglected downside of the negligence rule.     

Airline Schedule Competition and the Entry Route Choices of Low‐Cost Carriers

This study investigates the entry route choices of low‐cost carriers (LCCs). A LCC considers whether to enter a spoke route or a rim route of a major carrier's hub‐spoke network. Under a Cournot schedule competition model, we demonstrate that rim entry is more profitable for LCCs if connecting passengers' hub‐through additional travel time cost is large, and spoke entry is more profitable if this time cost is small. Welfare analysis shows that rim entry is socially preferable when the time cost is large and that spoke entry is socially preferable when the time cost is small. In a certain range of time costs, however, LCCs choose spoke entry even though it is not socially preferable.     

Transaction costs and economic growth under common legal system: State‐level evidence from Mexico

This paper examines the contribution of administrative and procedural transaction costs to economic growth under common legal system. We show that administrative and procedural costs vary quite a lot even within the institutional environment sharing the common legal system. States with low‐cost business registration, low‐cost access to property rights and greater judicial efficiency tend to have consistently higher growth. The established effects are robust to alternative model specifications, heterogeneity bias, and to a variety of control variables that might confound the effects of administrative and procedural costs on growth. Such differences in costs are far from being trivial as we show that these within‐system differences might be instrumental in influencing economic growth. Lower administrative and procedural costs induce growth by increasing investment rate, lowering unemployment rate, encouraging labor supply and improving total factor productivity. In the counterfactual scenario, the transition from high‐cost to low‐cost regime is associated with substantial growth and development gains over time. By exploiting the variation in the disease environment, ethnic fractionalization and historical urbanization, we show that the negative effect of rising procedural and administrative costs on growth and development appears to be causal.