The paper proposes a model to study the conditions under which complex networks emerge (or not) when agents are involved in a dynamic coordination setup. The focus, however, is not on the classical issue of equilibrium selection - instead, our aim is to shed light on how agents' efforts to...

It is common to define a network organization as one that is fast and flexible in adapting to changes in the underlying environment. But besides the short-run advantages of adaptability, fast changes in the structure of the organization can also be detrimental in the longer run. This happens, in...

We study the long-run-emergency of behavioral patterns in dynamic complex networks. Individuals display two kinds of behavior: G("good") or B ("bad"). We assume that agents have an innate tendency towards G, but can also be led towards B though the influence of peer bad behavior. We model the...

The aim of this paper is to investigate how the capacity of an economic system to absorb shocks depends on the specific pattern of interconnections established among financial firms. The key trade-off at work is between the risk-sharing gains enjoyed by firms when they become more interconnected...

In a variety of contexts - ranging from public goods provision to information collection - a player's well-being depends on own action as well as on the actions taken by his or her neighbors. We provide a framework to analyze such strategic interactions when neighborhood structure, modeled in...

Distance effects in empirical gravity equations appear to be too high to be explained by transport costs alone. Moreover, despite the strong and ongoing reduction of transport costs, the estimated coefficients are rather increasing than decreasing over the last six decades. To address the two...

This paper introduces asymmetric awareness into the classical principal-agent model and discusses the optimal contract between a fully aware principal and an unaware agent. The principal enlarges the agent's awareness strategically when proposing the contract. He faces a trade-off between...

Decision-makers can benefit from the experience of others with solutions to common problems. If a best practice exists, the challenge is to recognize it and to ensure its diffusion. Information about different solutions is often dispersed, and decision-makers may be reluctant to switch for...

This paper presents a model of non-cooperative network formation similar to Bala and Goyal (2000), except that marginal costs in the size of the network is increasing. Agents link among each other to gain information and update their links according to a better reply dynamics. In the long run...

We present a model of collective action in a heterogenous population of egoists and conditional cooperators. Each player is uncertain about the cooperative inclinations of the other player. A government or principal who has information about the distribution of types may introduce sanctions for...