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Network Economics seminar / Diffusion and Cascading Behavior in Random Networks

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The spread of new ideas, behaviors or technologies has been extensively studied using epidemic models. Here we consider a model of diffusion where the individuals’ behavior is the result of a strategic choice. We study a simple coordination game with binary choice and give a condition for a new action to become widespread in a random network. We also analyze the possible equilibria of this game and identify conditions for the coexistence of both strategies in large connected sets. Finally we look at how can firms use social networks to promote their goals with limited information. Our results differ strongly from the one derived with epidemic models. In particular, we show that connectivity plays an ambiguous role: while it allows the diffusion to spread, when the network is highly connected, the diffusion is also limited by high-degree nodes which are very stable. In the case of a sparse random network of interacting agents, we compute the contagion threshold for a general diffusion model and show the existence of (continuous and discontinuous) phase transitions. We also compute the minimal size of a seed of new adopters in order to trigger a global cascade if these new adopters can only be sampled without any information on the graph. We show that this minimal size has a non-trivial behavior as a function of the average connectivity. Our analysis extends methods developed in the random graphs literature based on the properties of empirical distributions of independent random variables, and leads to simple proofs.

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