Was grateful to share at an #ASSA2021 session today a bit on what I've learned in teaching an undergraduate course on the Economics of Networks.
A short thread to serve as a focal point for any follow-up conversation.
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What networks is about (very rough and probably somewhat idiosyncratic description)
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I taught several variants of an undergraduate elective on this exciting and growing area. It was at the applied math/econ/CS intersection -- sometimes cross-listed, sometimes just economics but open to (and taken by) applied math, CS, other students.
This thread gives my own gloss and expansion of some points Doctor et al. raise.
Peters and co think there is a hidden assumption of economic theory: specifically, they think expected utility theory secretly assumes a mathematical property called ergodicity.
This is false.
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Expected utility theory makes 4 assumptions, which are stated precisely and concisely in every graduate textbook. Ergodicity is not among them.
EU is not the kind of theory that can hide assumptions: it is like Newtonian mechanics, not like Freudian analysis.
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Let me very briefly jot down some notes as I read...
Take a basic static input/output model, and suppose we don't worry about nonlinearities in static equilibrium (as Baqaee and Farhi very productively have done).
Then it's easy to know which shocks matter for welfare...
"Reductionist" (i.e., most economic) theories of collective action explain acts like voting by individual incentives, perhaps including "social" phenomena via payoff terms like social pressure or warm glow.
A short thread about an (old) complaint about such theories.
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A reductionist theory might say: when you vote, you're almost certainly not pivotal, but you value praise for helping, or you just like the identity of standing for X.
BUT: "praise," "blame," and "identity" are not individualistic ideas.
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Praise, blame, identity, etc. make sense only in a community and a culture that gives them meaning.
"Individualistic" accounts with these special payoff adjustments are incomplete without some engagement with the sources of those "non-individualistic" reasons and motives.
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