Networks, Shocks, and Systemic Risk

Acemoğlu, Daron; Ozdaglar, Asuman; Tahbaz-Salehi, Alireza

doi:10.3386/w20931

Cited by 92 publications

(93 citation statements)

References 45 publications

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“…Recently, several studies analyzed the impacts of the 2008 grain crisis on trade, highlighting the importance of shock propagation within the foodtrade system for food security and vulnerability (e.g. Heady 2011, Acemoglu et al 2015). Nevertheless, few studies have analyzed this phenomenon for foodcommodity trade networks.…”

Section: Introductionmentioning

confidence: 99%

Vulnerability to shocks in the global seafood trade network

Gephart

Rovenskaya

Dieckmann

et al. 2016

Environ. Res. Lett.

117

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Trade can allow countries to overcome local or regional losses (shocks) to their food supply, but reliance on international food trade also exposes countries to risks from external perturbations. Countries that are nutritionally or economically dependent on international trade of a commodity may be adversely affected by such shocks. While exposure to shocks has been studied in financial markets, communication networks, and some infrastructure systems, it has received less attention in food-trade networks. Here, we develop a forward shock-propagation model to quantify how trade flows are redistributed under a range of shock scenarios and assess the food-security outcomes by comparing changes in national fish supplies to indices of each country's nutritional fish dependency. Shock propagation and distribution among regions are modeled on a network of historical bilateral seafood trade data from UN Comtrade using 205 reporting territories grouped into 18 regions. In our model exposure to shocks increases with total imports and the number of import partners. We find that Central and West Africa are the most vulnerable to shocks, with their vulnerability increasing when a willingness-to-pay proxy is included. These findings suggest that countries can reduce their overall vulnerability to shocks by reducing reliance on imports and diversifying food sources. As international seafood trade grows, identifying these types of potential risks and vulnerabilities is important to build a more resilient food system.

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Section: Introductionmentioning

confidence: 99%

Vulnerability to shocks in the global seafood trade network

Gephart

Rovenskaya

Dieckmann

et al. 2016

Environ. Res. Lett.

117

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show abstract

“…Specifically, we distinguish the case of games with strategic complements and substitutes and show that the equilibrium outcome exhibits properties as in finite network games with complements and substitutes, see e.g. [27,28,29,30,31,32]. Notably in the case of complements, the strategy of each agent at equilibrium is proportional to its Bonacich centrality in the underlying graphon, as recently defined in [33].…”

mentioning

confidence: 83%

Graphon Games: A Statistical Framework for Network Games and Interventions

Parise

Ozdaglar

2019

SSRN Journal

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In this paper, we introduce a new class of infinite population games, which we term graphon games. As a first contribution, we show that graphon games can be used to describe strategic behavior in heterogeneous populations of infinite size. We establish existence and uniqueness of graphon equilibria and derive general comparative statics results. As a second contribution, we study the equilibria of an ensemble of finite network games sampled from a stochastic network formation process (represented by the graphon). We provide explicit bounds on the distance of the equilibrium of any finite sampled network game and the corresponding graphon equilibrium in terms of the population size, and we characterize optimal interventions in sampled network games by a planner who knows the graphon but not the realization of the sampled network. Finally, as a third contribution, we relax the assumption that agents know the sampled network and establish a tight link between the graphon equilibrium and the Bayesian Nash equilibrium of an incomplete information network game sampled from the same graphon.

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“…We demonstrate the effectiveness of our approach on a model of rumor spreading in opinion dynamics. Other applications of quadratic network games where our results could apply are production networks and systemic risk in financial networks as described in [2] or crime, education and urban dynamics as described in [11], [12].…”

Section: Introductionmentioning

confidence: 99%

“…Network aggregative games (NAGs) are games in which the cost function of each agent depends on its own strategy and on an aggregate of the strategies of its neighbours, as defined by an underlying interaction network. NAGs are used to model a vast range of applications spanning from sociology [1] and economics [2] to traffic [3] and energy markets [4], [5]. In many cases, the resulting models depend on a vector of parameters that might represent either some exogenous factor in the case of social applications (e.g.…”

Section: Introductionmentioning

confidence: 99%

Sensitivity analysis for network aggregative games

Parise

Ozdaglar

2017

2017 IEEE 56th Annual Conference on Decision and Control (CDC)

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We investigate the sensitivity of the Nash equilibrium of constrained network aggregative games to changes in exogenous parameters affecting the cost function of the players. This setting is motivated by two applications. The first is the analysis of interventions by a social planner with a networked objective function while the second is network routing games with atomic players and information constraints. By exploiting a primal reformulation of a sensitivity analysis result for variational inequalities, we provide a characterization of the sensitivity of the Nash equilibrium that depends on primal variables only. To derive this result we assume strong monotonicity of the mapping associated with the game. As the second main result, we derive sufficient conditions that guarantee this strong monotonicity property in network aggregative games. These two characterizations allows us to systematically study changes in the Nash equilibrium due to perturbations or parameter variations in the two applications mentioned above.

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Networks, Shocks, and Systemic Risk

Cited by 92 publications

References 45 publications

Vulnerability to shocks in the global seafood trade network

Vulnerability to shocks in the global seafood trade network

Graphon Games: A Statistical Framework for Network Games and Interventions

Sensitivity analysis for network aggregative games

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