




NEXT  Workshop on Networks and ExternalitiesBudapest, 2627 May 2014 Home  Organisers  Program  Venue  Photos  Research group  ProgramPlease check the program for last minute changes. The abstracts of the presentations are at the end of the program. Monday, 26 May 20149:309:50 Registration9:5010:00 Opening speech10:0011:00 Session 1
Hubert Kiss: A Markov chain based dynamic model of bank runs Gergely Horváth: When does observing other depositors lead to a bank run? 11:0011:30 Coffee break11:3012.30 Session 2
Lars Ehlers: StrategyProofness and Essentially SingleValued Cores Revisited Ruben Juarez: Strategyproof resource allocation on a network 12:3014:00 Lunch break14:0015:00 Invited talk 1Bhaskar Dutta: The Formation of Partnerships in Social Networks 15:0015:30 Coffee break15:3016:30 Session 3
László Kóczy: A riskbased core Péter Csóka: Risk Capital Allocation in Networks 19:0022:00 DinnerTuesday, 27 May 20149:3010:30 Invited talk 2Herbert Hamers: Networks and terrorism: on structure and importance 10:3011:00 Coffee break11:0012:30 Session 4
Alexandru Nichifor: Targeted vs. Collective Information Sharing in Networks Ugo Bolletta: Endogenous Peer Group Formation and Peer Effects Artur Tomaszewski: A Bargaining Set Model as a Tool for evaluating Share Split in a Merger 12:3014:00 Lunch break14:0015:00 Invited talk 3Walid Saad: Matching and Cooperation in Wireless and Communication Networks 15:0015:30 Coffee break15:3016:30 Session 5Dávid Csercsik: Enhancing stability in cooperative traffic routing games on scale free wireless networks Mária Csanádi: The Interactive partystate (IPS) model AbstractsAlexandru Nichifor: Targeted vs. Collective Information Sharing in Networks
We introduce a simple twostage game of endogenous network formation and information sharing for reasoning about the optimal design of social networks like Facebook or Google+. We distinguish between unilateral and bilateral connections and between targeted and collective information sharing. Agents value being connected to other agents and sharing and receiving information. We consider multiple utility specifications. We show that the game always has an equilibrium in pure strategies and then we study how the network design and the utility specifications affect welfare. Surprisingly, we find that in general, targeted information sharing is not necessarily better than collective information sharing. However, if all agents are either \babblers" or \friends", irrespective of Artur Tomaszewski: A Bargaining Set Model as a Tool for evaluating Share Split in a Merger
Value maximization is nowadays each company’s goal. A firm can reach this by either increasing its potential (internal increase) or by collaborating with other companies external increase). In a merger two firms make a decision to found a new jointstock company. Shareholding of the new firm is divided between its owners. The founders carry out various negotiation talks and reach some share split agreement. The challenge in this article is to use one of the game theory models to calculate a fair (for both partners) share split. Ugo Bolletta: Endogenous Peer Group Formation and Peer Effects
This paper studies a network game where players choose simultaneously behaviours and reference groups. The game is represented through a static linear economy with local interactions. The equilibrium is worked out in two stages where optimal behaviours are evaluated for different structures Mária Csanádi: The Interactive partystate (IPS) modelA comparative analytical model describes the structure, operation and transformation of partystate systems. This model is called Interactive Partystate model (IPS) (Csanádi, 1997, 2006). The model is based on the dependency and interest promotion relationships among party state and economic decisionmakers during the decisionmaking process. The model incorporates the interactive network these relationships form, its main elements, main connecting and operating principles. It describes the selection system in the distribution of resources based on the political rationality of the structure and operation of the network. It analyzes the adapting behavior and interest of decisionmakers that leads to the cohesion and selfreproduction of the network. It also deals with the main endogenous structural and behavioral traps embodied by the political rationality of economic behavior during selfreproduction of the network that incites system transformation. The model describes the above structural and operational characteristics as selfsimilar traits of the network in space, time and aggregation levels. But it also describes the structural background of the disparities in selfreproduction and transformation, based on the different distributions of power within the network despite selfsimilarities. These different distributions of power will have an impact on the different pace, sequence and conditions of system transformation and consequently, on the varieties of the emerging new system. Bhaskar Dutta: The Formation of Partnerships in Social Networks
Agents use social networks to exchange favors, information, etc. Reciprocity is a key determinant of whether partnerships are formed or not. In this paper, we explore the structure of networks which support efficient formation of partnerships. Dávid Csercsik: Enhancing stability in cooperative traffic routing games on scale free wireless networks
Local routing protocols in scale free networks have been extensively studied. We consider a wireless contextualization of this routing problem and analyze on the one hand how cooperation affects network efficiency, and on the other hand the stability of cooperation structures. Cooperation is interpreted as local exchange of topological information between cooperating agents, and the payoff of a certain node is defined based on its energy consumption during the routing process. We show that if the payoff of the nodes is the energy saving compared to the allsingleton case, basically coalitions are not stable. We introduce coalitional load balancing and net reward to enhance coalitional stability and thus the more efficient operation of the network. As in the proposed model cooperation strongly affects routing dynamics of the network, externalities will arise and the game is defined in a partition function form. Péter Csóka: Risk Capital Allocation in Networks
Risk allocation games are cooperative games that are used to attribute the risk of a financial entity to its subunits. In this paper, we extend the literature on risk allocation games by incorporating the situation when agents have mutual claims on each other, represented by a network. The definition of a risk allocation game in a network is not straightforward, since the presence of the network leads to externalities. The results can be used to help identifying systematically important financial institutions. Lars Ehlers: StrategyProofness and Essentially SingleValued Cores Revisited
We consider general allocation problems with indivisibilities where agents' preferences possibly exhibit externalities. In such contexts many different core notions were proposed. One is the gammacore whereby blocking is only allowed via allocations where the nonblocking agents receive their endowment. We show that if there exists an allocation rule satisfying individual rationality, efficiency, and strategyproofness, then for any problem for which the gammacore is nonempty, the allocation rule must choose a gammacore allocation and all agents are indifferent between all allocations in the gammacore. We apply our result to housing markets, coalition formation and networks. Herbert Hamers: Networks and terrorism: on structure and importance
All over the world intelligence services are collecting data concerning possible terrorist threats. This information is usually transformed into network structures in which the nodes represent the individuals in the data set and the links possible connections between these individuals. Gergely Horváth: When does observing other depositors lead to a bank run?
Empirical descriptions and studies suggest that generally depositors observe a sample of previous decisions before deciding if to keep their funds deposited or to withdraw. These observed decisions may exhibit di erent degrees of correlation across depositors. We study the e ect of the correlation in samples on the likelihood of bank runs assuming that the depositors use a threshold decision rule. Theoretically, with highly correlated samples and in nite depositors runs occur with certainty, while with independent samples it needs not be the case. For many parameter settings, the likelihood of bank runs is less than one. To investigate the intermediate cases, we use simulations and nd that decreasing the correlation reduces the likelihood of bank runs, often in a nonlinear way. We also study the e ect of the sample size and show that increasing it makes bank runs less likely. Our results have relevant policy implications. Ruben Juarez: Strategyproof resource allocation on a networkAgents care about the amount of money they receive as well as the amounts that their neighbours receive. The existence (or nonexistence) of a link between a pair of agents is private information of these two agents. We introduce and characterize the class of strategyproof mechanisms for di erent shapes in the utility function. We compute the in effciency of these mechanism using the worst absolute surplus loss. The optimal mechanism using this measure is provided for an additive utility function. Hubert Kiss: A Markov chain based dynamic model of bank runsWe propose a discrete time probabilistic model of depositor behavior which takes into account the information flow among depositors. In each time step each depositors current state is determined in a stochastic way, based on its previous state, the state of other depositors and the strategy of the bank. The bank may offer payments for impatient depositors, who accept or decline these offers with certain probability. The connections of depositors affect the evolution of the state trajectory as well: If high number of other depositors I know are demanding moneyfrom the bank, I'll turn also impatient with higher probability.Considering a proposed model, it makes sense to ask, what is the optimal strategy of the bank to propose offers if he wants to keep the expected chance of a bank run under a certain level, and minimize his expected cost. We show that in the case of the proposed model this question results in a nonlinear optimization problem with nonlinear constraints. László Kóczy: A riskbased core
In partition function form games the value of a coalition depends on the entire partition. As a result, a deviating coalition can only form expectations regarding its postdeviation payoff as the latter is a function of the induced residualartition. Existing literature approached the problem from the side of conservativism, assuming the worst often completely ignoring the interests of the residual players. We borrow the idea of risk from the finance literature and compare the risk of staying with the original partition with the risk of deviating. Employing this idea to the core leads to a new concept that we call the riskbased core. We introduce this concept and discuss its properties. Walid Saad: Matching and Cooperation in Wireless and Communication Networks
Nextgeneration networked systems are characterized by three key features: heterogeneity, in terms of technology and devices, dynamics, in terms of rapidly varying environments and uncertainty, and size, in 

