Targeting Interventions in Networks
Abstract:
Individuals interact strategically with their network neighbors. A planner can shape incentives in pursuit of an aggregate goal, such as maximizing welfare or minimizing volatility. We analyze a variety of targeting problems by identifying how a given profile of incentive changes is amplified or attenuated by the strategic spillovers in the network. The optimal policies are simplest when the budget for intervention is large. If actions are strategic complements, the optimal intervention changes all agents’ incentives in the same direction and does so in proportion to their eigenvector centralities. In games of strategic substitutes, the optimal intervention is very different: it moves neighbors’ incentives in opposite directions, dividing local communities into positively and negatively targeted agents, with few links across these two categories. To derive these results and characterize optimal interventions more generally, we introduce a method of decomposing any potential intervention into principal components determined by the network. A particular ordering of principal components describes the planner’s priorities across a range of network intervention problems.

Full details of this seminar series are available at the following link:
www.davidronayne.net/lgn-seminar
Date: 20 November 2018, 12:45 (Tuesday, 7th week, Michaelmas 2018)
Venue: Nuffield College, New Road OX1 1NF
Venue Details: Clay Room
Speaker: Andrea Galeotti (LBS)
Organising department: Department of Economics
Part of: Learning, Games and Network Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Erin Saunders, Melis Clark