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DECO 1915A - Economic theory of Networks and Strategic Interaction (The)

Type d'enseignement : Elective

Semester : Spring 2017-2018

Number of hours : 24

Language of tuition : English


Mathematical models are used frequently in this course. Students should have had an introductory course in micro-economics and a mathematical background sufficient to be familiar and at ease with mathematical notation and notions such as functions of a real variable, derivatives, indexed sums.

Course Description

We are all surrounded by and embedded in networks, be it those of our friends or professional contacts or networks mediated by the web, such as Facebook or LinkedIn. Networks also play a major role in economic life: the nature of the network linking consumers may determine whether a new product spreads by word of mouth, the credit network linking different banks can affect their risk of default. For the individual, being part of a network allows him to receive or transmit information, to influence or be influenced by others. Therefore, occupying a favorable position in a network can be seen as a strategic asset. In this course we will be interested in how rational individuals behave when they position themselves in networks or interact through a given network. These issues will be analyzed in the micro economic/game theoretical framework of utility maximizing agents. We introduce tools for modeling, describing and analyzing networks and review criteria for identifying the most central, well connected or influential agents in the network. We then explore the problem of strategic network formation in different contexts and analyze the stability and efficiency of the networks that are formed. Finally, we will be interested in how network architecture can influence different social processes such as the spread of an innovation or a trend from a group of initial adopters to a larger part of the population.


TANIMURA, Emily (Maître de Conférences)

Pedagogical format

The course will be based on lectures with pdf slides but the sessions will also comprise exercises, problem solving and the study of examples to be completed individually or in groups.

Course validation

The final grade will take into account the following: participation in class and in particular participation in exercises and assignments distributed in class. Possibly students will be asked to prepare a short presentation. Completion of homework assignments (such as material to read before class) These parts will account for at least 30% of the grade. A final written exam.


This course requires the students to absorb a number of new theoretical notions fairly rapidly.

Required reading

  • Selected readings from the following manuals:
  • Matthew O. Jackson "Social and Economic Networks", Princeton University Press, 2008
  • A. Degenne and M. Forsé, " Introducing Social Networks, Sage Publications, London, 1999
  • Sanjeev Goyal, "Connections: An Introduction to the Economics of Networks", Princeton University Press, 2007

Additional required reading

  • A selection of research papers:
  • Jackson M.O., Wolinsky A. (1996) A strategic model of social and economic networks, Journal of Economic Theory, 71: 44--74
  • Jackson M.O., Rogers B.W. (2005) The Economics of small worlds, Journal of the European Economic Association, 3: 617--627