This paper studies the formation of networks among individuals. The focus is on the compatibility of overall societal welfare with individual incentives to form and sever links. The paper reviews and synthesizes some previous results on the subject, and also provides new results on the existence...

We examine how the speed of learning and best-response processes depends on homophily: the tendency of agents to associate disproportionately with those having similar traits. When agents' beliefs or behaviors are developed by averaging what they see among their neighbors, then convergence to a...

We investigate the role of networks of alliances in preventing (multilateral) interstate wars. We first show that, in the absence of international trade, no network of alliances is peaceful and stable. We then show that international trade induces peaceful and stable networks: trade increases...

We study learning and influence in a setting where agents communicate according to an arbitrary social network and naively update their beliefs by repeatedly taking weighted averages of their neighbors' opinions. A focus is on conditions under which beliefs of all agents in large societies...

This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy...

This paper analyses whether and how a climate policy designed to stabilize greenhouse gases in the atmosphere is likely to change the direction and pace of technical progress. The analysis is performed using an upgraded version of WITCH, a dynamic integrated regional model of the world economy....

We study the optimal design of the rules of trade in a two-period market given that agents arrive at different times and may only trade with agents present contemporaneously. First period agents face a fixed cost of trading across periods, and their decisions of whether or not to trade in the...

For groups that must make several decisions of similar form, we define a simple and general mechanism that is designed to promote social efficiency. The mechanism links the various decisions by forcing agents to budget their representations of preferences so that the frequency of preferences...

Climate-economy models aiming at quantifying the costs and effects of climate change impacts and policies have become important tools for climate policy decision-making. Although there are several important dimensions along which models differ, this paper focuses on a key component of climate...

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of...