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Multiple Activities in Networks†

Multiple Activities in Networks† AbstractWe consider a network model where individuals exert efforts in two types of activities that are interdependent. These activities can be either substitutes or complements. We provide a full characterization of the Nash equilibrium of this game for any network structure. We show, in particular, that quadratic games with linear best-reply functions aggregate nicely to multiple activities because equilibrium efforts obey similar formulas to that of the one-activity case. We then derive some comparative-statics results showing how own productivity affects equilibrium efforts and how network density impacts equilibrium outcomes. (JEL C72, D11, D85, Z13) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Multiple Activities in Networks†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20160253
Publisher site
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Abstract

AbstractWe consider a network model where individuals exert efforts in two types of activities that are interdependent. These activities can be either substitutes or complements. We provide a full characterization of the Nash equilibrium of this game for any network structure. We show, in particular, that quadratic games with linear best-reply functions aggregate nicely to multiple activities because equilibrium efforts obey similar formulas to that of the one-activity case. We then derive some comparative-statics results showing how own productivity affects equilibrium efforts and how network density impacts equilibrium outcomes. (JEL C72, D11, D85, Z13)

Journal

American Economic Journal: Microeconomics – American Economic Association

Published: Aug 1, 2018

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