Targeting Interventions in Networks
Authors
Galeotti, A.
Golub, B.
Goyal, S.
Publication Date
2017-10-19Series
Cambridge Working Papers in Economics
Publisher
Faculty of Economics
Type
Working Paper
Metadata
Show full item recordCitation
Galeotti, A., Golub, B., & Goyal, S. (2017). Targeting Interventions in Networks. https://doi.org/10.17863/CAM.38654
Abstract
We study the design of optimal interventions in network games, where individuals' incentives to act are affected by their network neighbors' actions. A planner shapes individuals' incentives, seeking to maximize the group's welfare. We characterize how the planner's intervention depends on the network structure. A key tool is the decomposition of any possible intervention into principal components, which are determined by diagonalizing the adjacency matrix of interactions. There is a close connection between the strategic structure of the game and the emphasis of the optimal intervention on various principal components: In games of strategic complements (substitutes), interventions place more weight on the top (bottom) principal components. For large budgets, optimal interventions are simple - targeting a single principal component.
Identifiers
CWPE1744
This record's DOI: https://doi.org/10.17863/CAM.38654
This record's URL: https://www.repository.cam.ac.uk/handle/1810/291494
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